At least ten banks withdrew their mortgage loan offers from the market on Tuesday, amid panic over the plummeting pound sterling.what could fuel another sharp rise in interest rates.
The Bank of England announced that “it would not hesitate” to raise interest rates again, after the fall of the pound that it reached its lowest level against the dollar in 37 years.
The pound tumbled against the dollar on Monday after Finance Minister Kwasi Kwarteng promised more tax cuts on top of a £45bn package he already announced in a “mini-budget” on Friday.
Among the big lenders that withdrew mortgage offers were Halifax, Virgin Money and Skipton, as the base interest rate is at 2.25 percent and could rise to 6 percent in April, according to analyst predictions. .
So did the financial institutions Scottish Building Society, Leek United Building Society, Clydesdale Bank, Nottingham Building Society, Bank of Ireland and Paragon Bank.
Danske Bank, one of Northern Ireland’s largest lenders, said they were closely monitoring the competitive landscape to ensure their mortgage product offerings were in line with the broader market. The bank announced that it had withdrawn all offers for home purchase loans yesterday, and would launch new ranges as soon as possible.
The concern of savers
Robin Price, a minimum wage sales assistant, told the BBC that he had been saving his mortgage deposit for years and, thanks to that and an inheritance, was now ready to buy, but with the threat of a steep increase. on interest rates assured that now you feel completely lost.
“I just want a house,” said the 38-year-old who fears monthly mortgage payments will become unaffordable for him, just as he wanted to buy his own place. In that sense, he said that he can’t find anywhere that he can pay a mortgage in London or Essex, because he doesn’t earn enough.
Bank of England anticipates “significant” response
The chief economist of the Bank of England, Huw Pill, anticipated on Tuesday that the entity will evaluate a “significant” response to the fall of the pound sterling. Addressing the impact of Prime Minister Liz Truss’s executive moves at an event in London, Pill said: “I think it’s hard not to jump to the conclusion that all of this is going to require a significant monetary response.”
The chief economist stressed that any decision is likely to be taken at the regular meeting of the central bank’s monetary policy committee on November 3, where a further rise in interest rates will be discussed. Until then, Pill called on the government to calm the markets with messages that convey the “stability and credibility” of the British economy.
While the Truss government is focused on trying to boost economic growth, the Bank of England will continue to be vigilant in trying to control persistent inflation, he added. The entity is “prepared to make unpopular decisions if necessary,” he stressed.