Over a third of tracker mortgages were withdrawn from the market following the Bank of England’s base rate cut on 19 March, according to Mortgage Solutions.
Lenders are switching their focus from new borrowers to supporting existing customers during the coronavirus pandemic.
This includes withdrawing products for new borrowers, to ensure they can offer help to customers in need of mortgage payment holidays for the immediate future.
HSBC has temporarily removed access to all two-year tracker rate products. Meanwhile, Barclays has withdrawn a selection of mortgages across their residential and buy to let range. Together Financial Services also halted all new borrowing as it takes ‘prudent steps’ to implement government advice and manage existing customer needs.
Smaller lenders are likely to become more risk-averse in the coming weeks. The current economic crisis means that many borrowers may no longer be financially secure. Several have started to withdraw high loan-to-value (LTV) products. According to moneyfacts.co.uk, Kensington, Progressive Building Society and Foundation Home Loan have pulled their entire mortgage ranges on an 80% LTV of above.
Eleanor Williams, financial expert at Moneyfacts.co.uk, said: “The recent withdrawal of some higher LTV mortgage products is hopefully just a temporary measure, while mortgage providers take some time to reassess risk in this area of the market and react.”
Nationwide reintroduces tracker mortgages
However, having considered the impact of the two interest rate cuts across their product range, some lenders may change tack.
Nationwide brought back tracker mortgages just days after it withdrew the product from its range. First-time buyers and borrowers borrowing for a house move can access the tracker from 1.39%. Those seeking to remortgage can get rates from 1.19%.
Henry Jordan, director of mortgages at Nationwide, said: “We are re-introducing two-year trackers to our mortgage range to enable us to offer products with flexibility and no early repayment charges.”
The lender has also confirmed that it will be passing on a further 0.15% rate reduction to existing variable-rate borrowers. This is in addition to the initial 0.50% reduction due to be passed onto borrowers on 1 April. Existing tracker rate mortgage borrowers will also benefit from the 0.15% reduction.
Nationwide’s new rates will come into effect on 15 April. The base mortgage rate (BMR) and standard mortgage rate (SMR) will reduce by 0.15% to 2.10% and 3.59% respectively.
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