More mortgages withdrawn-no let up for borrowers

Last week sadly saw another 240 fixed and variable rate mortgage products withdrawn from the market, piling more misery and even less choice onto borrowers. According to financial analysts Moneyfacts, this now brings the total number available to 5,485.

What a difference a year can make (or rather 6months) since it was only last summer there were almost 16,000 products on the market. Many of the mortgages which have been withdrawn were most suited to first-time buyers or those deemed ‘high-risk’ borrowers-including the self-employed.

Unfortunately the effects of the cull in products is far more widespread and many ‘innocent’ borrowers just coming to the end of a current agreement, or perhaps just those shopping around for a better deal from themselves are suffering a blow of raised rates and/or higher deposits required. Some of the ‘bigger’ named lenders operating this way include Abbey, Halifax and Nationwide.

David Hollingworth from broker London & Country terms this a “vicious cycle for borrowers.” He says, “One lender raises its rates or deposit qualification; this then makes another lender a best buy; they get inundated with new business, can’t cope or decide they do not want to be lending the sums involved and this leads to rates being raised or the product being withdrawn.”

In an attempt to cope with the demand from Norwich and Peterborough building society initially hired more staff, however last week it did finally raised its new mortgage rates in order to “protect service standards” claimed their chief executive.

The mortgage market’s current tumultuous state is because of the double hitting credit crunch and lower house prices. A Moneyfacts representative believes “They are worried they won’t be able to raise enough to fund their mortgage offers and that recent house-price falls could turn into a slump.”