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  • by Daniel Thomas
  • Business Correspondent, BBC News

image source, Getty Images

Nearly 10% of UK mortgage deals have been withdrawn from the market since last week amid concerns about how high interest rates will go, data showed.

Around 800 residential and buy-to-let deals have been pulled as lenders reassess their offers, according to financial information firm Moneyfacts.

Meanwhile, average rates for two- and five-year fixed-term contracts also increased.

It came after the better-than-expected inflation figures lowered forecasts for how much UK interest rates would rise.

Data released last week showed that UK inflation – which measures the rise in prices – fell to a lower-than-expected 8.7% in April.

That led to a strong reaction in the market, with investors now predicting that the Bank of England will have to raise interest rates from the current 4.5% to 5.5% to try to delay rate hikes.

The expected change in bond markets led to large movements in prices and interest rates, and this spilled over into bonds. So-called exchange rates, which lenders use to price home loans, have increased.

According to Moneyfacts, since the start of last week the number of home loans on the UK market has fallen by 373 – from 5,385 offers to 5,012.

The number of buy-to-let loans fell by 405 to 2,343.

Mortgage rates also increased, with the average rate on a two-year fixed contract rising to 5.38%, and the average rate on a five-year fixed contract now standing at 5.05%.

Although far from the levels seen last October, it is well above last May when two-year and five-year fixed rates stood at 3.03% and 3.17% respectively. Increased borrowing costs.

“Borrowers looking for a new deal may be concerned about recent changes in the mortgage market,” says Rachel Springle, finance expert at Moneyfacts.

“Over the past few days we’ve seen a few lenders withdraw select fixed-rate products, with some exiting the market at least temporarily. Product selection has started to fall, and as expected, average fixed-mortgage rates have risen.”

Property prices have been falling over the past six months as falling borrowing costs have squeezed people’s purchasing power.

But earlier on Tuesday, property website Zopla said buyer confidence appeared to be improving, with sales reaching their highest level of the year through April.

However, boss Charlie Bryant told the BBC’s Today program last week that the inflation figures caused some uncertainty.

“What we’ve seen in the last few months is that if rates stay in the 4-4.5% range, that’s affordable for most buyers. If you look at the rates that came in shortly after the mini-budget, towards the end of last year, we’ve seen those rates go up to 5-5.5%, which has negated those fast home prices.” .

He added: “We’ll have to see what happens following the inflation data early last week, which saw a rise in exchange rates, leading mortgage lenders to raise rates slightly, which again could have a bigger impact.” “

What happens if I miss a mortgage payment?

  • A shortfall equal to two or more months of payments means you are officially in arrears.
  • Your lender should treat you fairly by considering any requests to change how they pay you, perhaps for a short-term lower payment.
  • Any arrangements you make will be reflected on your credit file – affecting your ability to borrow money in the future.

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