Moneyfacts, which tracks the industry, said 935 of 3,596 mortgage products had disappeared between Tuesday and Wednesday, double the previous record of 462 at the start of the pandemic lockdown. The sudden change threatens to stall the housing market, with borrowers saying they have been unable to secure loans or had temporary offers withdrawn, while others are paying huge financial penalties to break their existing deals and lock in fixed rates for longer . From shared ownership mortgage first-timers to people with multi-million pound mortgages, there is a palpable sense of a personal finance time bomb, with markets predicting interest rates will almost triple from 2.25% to 6% next spring. James Lindon-Travers of mortgage broker Lindon-Travers Associates in Surrey said he had a wealthy client willing to pay £95,000 in fines for breaking a fixed rate agreement. “He has 21 months left on a five-year contract at 1.89% and unfortunately for him the early redemption fee is 5%. He is prepared to pay an early repayment charge of £95,000 in order to secure a new interest rate of 3.49% over seven years,” the broker said. At the other end of the scale is Glen Robinson, who sought to remortgage his home to help finance the final stage of his divorce settlement. He had agreed a rate of £160 a month but this has now collapsed. “Now I will probably be forced into a distressed sale to collect the money from the courts,” he said. “I am 68 years old and facing almost certain financial ruin as a result of the chain of events unfolding.” A 42-year-old house-hunting software engineer in Cambridge, who asked not to be named, said she signed her application for a two-year fixed mortgage with an interest rate of 4.32% on Monday night, less than 12 hours after receiving the for-sale notice. double property. He spent Tuesday “panicking and refreshing Gmail” as he read articles about mortgage foreclosure. “At 4 p.m. I received an email asking me to sign mortgage documents. A minute later I got another email from my broker saying he had just been told my lender was pulling their rates tonight so if I wanted to secure my rate I had less than an hour to do so.” If the deal falls through, it says it will be valued “100%” by the market at current interest rates. “Everything leads to that.” New mortgagee Jeff, who is paying £600 a month on a shared flat in London, said: “I’m already panicking, wondering if I have to get a new job. “My mum told me not to panic, but you start thinking about all your expenses, not just the energy bills but the rent, bringing packed lunches, showering at work instead of at home.” Another young professional, Henry Langford, 31, said he chose shared ownership because it was the only way he could afford a flat on his own in an area of London he wanted to live. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. “I’m really worried about it. Conservative policies probably protect people like me. I wouldn’t vote for them but this has turned into a big trap. Should I sell? Will I be able to sell or am I coughing and trying to ride out the storm?’ he said. “I feel like this is the first time the middle classes are going to be pushed into this,” he said, referring to the broader cost-of-living crisis. “This is a bit of a wake-up call.” Karen Noye, mortgage expert at wealth management firm Quilter, said: “Lenders’ systems are breaking down with long virtual queues for borrowers and advisers trying to get them or their clients a deal at current rates.” “It’s absolutely crazy out there. We get lenders to withdraw agreements at short notice or without any notice. Normally they would give 48 hours,” Lindon-Travers added. He says it was important for consumers to remember that banks don’t withdraw “offers” but just shop window offers. Mortgage lenders can still lock in rates six months before fixed deals end and delay deciding on options until further down the line. “It’s not like the financial crash in 2008,” Lindon-Travers said. “Banks have money. Borrowing is still available and interest rates are still very low indeed. It’s just that millennials are in a whirlwind and they’re not used to seeing higher rates.”
