UK mortgage turmoil continues as Santander pulls deals for new borrowers

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Santander is the latest major bank to announce it is temporarily pulling its mortgage deals for new borrowers off sale as the turmoil in the home loans market shows no signs of abating.

Days after HSBC temporarily pulled down the shutters, Santander told mortgage brokers that it would stop accepting new applications for its “new business” residential and buy-to-let fixed and tracker rates at 7.30pm on Monday, with deals not becoming available again until Wednesday 14 June.

The move applies to applications made via mortgage brokers and online, though Santander said new deals for existing customers remained available, and that those people who applied before 7.30pm would not be affected.

Banks and building societies are continuing to pull home loans from their shelves, often with very little notice, and raise the cost of their fixed-rate deals. However, in more positive news for borrowers, TSB will on Tuesday reduce the cost of some of its new deals by up to 0.4 percentage points.

HSBC said on Thursday lunchtime that it would withdraw all its new business residential and buy-to-let products at 5pm that day, with deals becoming available again on Monday.

But about three hours later, in a sign of the fast-moving and chaotic market conditions, the bank said that “due to significant demand”, it would be removing the products from sale with immediate effect. Some mortgage brokers complained they had been sitting in a queue, unable to get through to HSBC, for more than an hour until they received the updated notification.

A Santander spokesperson said: “We continually review our products in light of changing market conditions. As we prepare for a relaunch of a full range of mortgage products from Wednesday morning, we will not be accepting new applications via intermediary and online channels temporarily from this evening. Our product transfer range remains fully available and customers who have already applied will not be impacted.”

The average rate on a new two-year fixed mortgage has continued to creep up and stood at 5.86% on Monday, according to the financial data provider Moneyfacts, compared with 5.26% at the start of May.

However, during the last few days the number of residential mortgage deals available has been climbing: on Monday it stood at 4,952 – up from 4,597 last Wednesday.

Meanwhile, TSB said that on Tuesday it would be reducing rates on selected two- and five-year deals by up to 0.4 percentage points across its residential and buy-to-let ranges. This may indicate it had priced its deals at higher than the market average.

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Nicholas Mendes, mortgage technical manager at broker John Charcol, said money market swap rates “have continued to see a steady increase, with no sign of falling, which is pushing lenders to continue to reprice”.

He added: “Last week Halifax and HSBC increased their fixed rates, with rates near or over 5% depending on the LTV [loan-to-value]. The pressure is on for homeowners to ensure they are quick to secure a rate if they are approaching the end of the their fixed rate or in the midst of a purchase application.”