A young woman close to buying a home has shown how the economic turmoil caused by the government’s mini-budget is affecting people’s lives.
An audience member on BBC’s Question Time told the panel how a mortgage offer at 4.5% had been withdrawn since Friday, and only a 10.5% rate was available – adding hundreds of pounds per month to payments.
Mortgage lenders have pulled hundreds of products from the market since analysts have suggested the Bank of England may need to raise interest rates to as high as 6% next year to keep inflation under control.
The woman, who said her name was Rabia, said: “I just want to know what the plan is for mortgages, because I was in the process of getting a mortgage as a young person and I was told my interest rate would be 4.5%, and then I was told today that the lender has pulled that offer and now the best offer can I get is about 10.5%.”
The audience gasped.
She added: “They’re saying that you need to immediately look at putting your application through, because if you don’t the lenders may even pull these offers. For me, as a first time buyer, I don’t think I can now afford to get a mortgage.”
Richard Bacon, the broadcaster who was a panelist on the show, asked fellow panelist and Tory minister Paul Scully: “Does that make you uncomfortable, Paul?”
In response to Rabia, Scully suggested it was worth waiting to see if the market settles as he compared the financial uncertainty to the start of the pandemic.
He said: “The certainty we want to give is through, first of all, communicating far better, far clearer, but secondly ... I’m trying to make sure that actually we can settle down the lending market to make sure that (Rabia) gets a better deal.”
The choice of mortgage products is continuing to shrink, according to Moneyfacts.co.uk.
Some 2,340 mortgage products were on sale on Thursday – down from 2,661 on Wednesday, after the choice fell by a record 935 products between Tuesday and Wednesday.
On Friday, the day of the mini-budget, 3,961 products were available – meaning residential mortgage product choice has shrunk by 1,621 deals since last Friday.
Brokers have said they expect lenders to return with new deals in the coming days.