LONDON (Reuters) – After recent political turmoil has wreaked havoc on the mortgage market, with mortgage prices skyrocketing and hundreds of products being debited, British MPs said on Wednesday: He called on banks to reduce the price of expensive mortgages.
Lenders withdrew about 1,700 mortgage products in a week and then reintroduced them at 1-2 percentage point higher interest rates as the market was turbulent after former Prime Minister Liz Truss’ late-September tax cut plan didn’t materialize.
Markets have stabilized since, but banks have been slow to cut fixed prices and reintroduce canceled products, said a member of the bipartisan Finance Ministry task force.
Banks must pass on the benefits of these mild market conditions to homebuyers, lawmakers added, amid concerns that low-income mortgage holders could be forced into default.
“Mortgage holders are, quite frankly, paying for Liz Truss’ mistakes…and they shouldn’t be,” opposition Labor MP Rushanara Ali said during a testimony session. I told Boss.
Charles Roe, director of mortgages for banking industry group UK Finance, told MPs lenders were reintroducing mortgage products at lower prices.
Roe also urged the government to review its support for mortgage interest rate schemes that help vulnerable homeowners pay interest on their mortgages.
But Ray Bolger, senior mortgage technical manager at broker John Chercol, said he was disappointed by the slow progress of lenders.
“Lenders don’t want to cut rates too quickly because they’re worried about too many applications coming in and not being able to meet service standards,” Boulger said. increase.
price drop forecast
Average 2- and 5-year fixed mortgage rates have fallen about 0.2 percentage points from recent peaks, but are still above 6%, according to Moneyfacts data.
Money Advice Trust CEO Joanna Elson said:
Britain’s biggest banks, including Lloyd’s and NatWest, said last week they expected house prices to fall 7-8% next year as rising mortgage costs and pressure on household budgets threaten to push the market into recession. Stated.
Chris Rhodes, chief financial officer of the Nationwide Building Society, told lawmakers that lenders’ central forecast is for home prices to fall 8% in 2023, with a worst-case scenario of a 30% decline. added.
Lenders have begun lowering fixed mortgage rates for existing customers, but rates for new customers are under review.
Floating-rate mortgage households, which track changes in benchmark interest rates set by the Bank of England, are bracing for higher costs as the market bets the central bank will raise interest rates by 0.75 percentage points on Thursday to curb inflation. .
Money Advice Trust’s Elson said the government needs to launch an information campaign similar to the one seen in 2008 for people facing home foreclosures, saying borrowers don’t have lenders. I advised him to consult with the company and set up a repayment schedule.
Reporting by Lawrence White and Ian Withers.Edited by Sinead Cruz and Alex Richardson
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