London Daily

Focus on the big picture.
Friday, Aug 22, 2025

Mortgage lenders halt some deals after pound falls

Mortgage lenders halt some deals after pound falls

Some mortgage deals have been withdrawn by banks and building societies due to volatility in the pound following the government's mini-budget.

Virgin Money and Skipton Building Society halted mortgage offers for new customers, but said submitted applications would still be processed.

Halifax said it would stop mortgages with product fees, which can result in better repayment rates.

It comes as the Bank of England said it was monitoring the markets "closely".

The bank said it would "not hesitate" to hike interest rates to curb inflation, after the pound fell to a record low against the US dollar.

It came following Chancellor Kwasi Kwarteng's pledge to cut taxes further at the weekend, on top of Friday's mini-budget, where he announced the biggest tax cuts in 50 years.

The plans will require a large increase in government borrowing and concerns among investors about the country's ability to repay that debt led to the value of the pound being pushed down. The cost of UK government borrowing also climbed.

Some investors believe the government's tax cuts will lead to people spending more, which will push up prices. So in an effort to limit price rises, the Bank could raise interest rates sooner and faster.

The Bank of England said it would make a full assessment as to whether it should change interest rates at its next meeting on 3 November, following speculation it might have intervened earlier.

The statement has prompted predictions that interest rates could more than double by next spring to 5.8% from their current 2.25%, to curb inflation - the rate at which prices for consumers rise.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said if interest rates rise as predicted, the average household refinancing a two-year fixed rate mortgage in the first half of next year would see monthly payments jump to £1,490 from £863.

"Many simply won't be able to afford this," he said.


Inflation is currently running at a 40-year high in the UK at 9.9%.

Experts said a rise in the cost of long-term borrowing meant the current cost to mortgage lenders of offering new deals was expensive.

A spokesman for Virgin Money confirmed its decision to halt deals for new customers was due to the market conditions.

Both it and Skipton Building Society said they would issue a new range mortgage of deals in the coming weeks.

Halifax said from Wednesday it would remove mortgage products that come with a fee "as a result of significant changes in mortgage market pricing we've seen over recent weeks".

Mortgage deals which have product fees can result in lower monthly repayments for homeowners, with the fee being added to the total mortgage debt.

But although mortgage rates may be lower per month, the overall cost of the loan will be higher due to more interest accruing over time.

Halifax said it hadn't changed its mortgage rates and it continued to offer product fee-free options for borrowers.

HSBC said it had no plans to change mortgage offers, while Natwest said its rates were under "continual review in line with market conditions".

Newsletter

Related Articles

0:00
0:00
Close
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
Jellyfish Swarm Triggers Shutdown at Gravelines Nuclear Power Station in Northern France
×