Mortgage lenders axe 10-year fixed-rate deals

Mortgage lenders have signed a slew of ten-year, fixed-rate contracts, while rising interest rates and high inflation wreak havoc on the housing market.

Lenders are scrambling to raise the cost of 10-year mortgages or withdraw them altogether, with more than 10 percent disappearing from the market since mid-May, according to Moneyfactscompare.

Homeowners and buyers are desperate for deals as rates continue to rise.

Banks and building societies have taken up hundreds of new home loans to reprice them at higher rates, fueled by fears of further increases in borrowing costs. Economists think the Bank of England will raise its key interest rate from 4.5 percent to 5.5 percent to curb inflation.

David Hollingworth, of mortgage broker L&C, said: ‘There is a lot of uncertainty in the market and it moves so fast.’

The average ten-year mortgage agreement is now 5.37 percent, compared to 5.08 percent on May 24.

But in February, lead banks First Direct, HSBC and Lloyds offered deals at less than 4 percent for a decade.

David Hollingworth, of mortgage broker L&C, said: ‘There is a lot of uncertainty in the market and it moves so fast’

Dominik Lipnicki, broker at Your Mortgage Decisions, said: “Some lenders have temporarily halted 10-year deals, indicating that lenders believe interest rates will continue to rise.”

Leeds Building Society, HSBC and Co-operative Bank are among those who have pulled out their ten-year fixes in the past two weeks.

Fears of a house price crash have mounted, with some realtors warning that the value could fall by as much as 20 percent over the next two years.

Graham Cox, a mortgage broker at Self-Employed Mortgage Hub, said: “A house price crash is inevitable, in my opinion.”