City Watch sends out weekly survey to lenders to monitor interest rates and check fair treatment in a mortgage storm
- The regulator’s weekly surveys are designed to monitor the market
- The data will not be published and will only be used for regulatory purposes
- Since September 23rd, mini budget mortgage rates have been rising rapidly
- However, some lenders are now lowering it slightly
The city’s regulator, the Financial Conduct Authority (FCA), sends out weekly surveys to mortgage lenders to gather information about rates and availability amid fears of the mortgage crisis.
As the regulator for mortgage lenders and administrators along with the Prudential Regulatory Authority (PRA), the FCA is in contact with lenders on a daily basis in order to monitor the market.
The survey asks if the lender has made any changes to interest rates or pulled any products.
Screening: The city regulator, the Financial Conduct Authority (FCA), collects information on mortgage rates from lenders each week, including asking them when to remove products from the market
In the weeks following the then-Chancellor’s ominous mini-balance on Sept. 23, mortgage rates skyrocketed, with the average two-year fixed interest rate across all long-term contracts reaching a peak of 6.65 percent on Oct. 20, according to Moneyfacts.
The last time the average two-year fixed-rate mortgage was 6.5 percent or more was in August 2008 at 6.94 percent.
It has fallen since then, with some lenders including Natwest and HSBC announcing interest rate cuts. On Oct. 28, the two-year average for repairs fell to 6.48 percent.
However, the Bank of England is expected to raise its base rate by 0.75 percent when the Monetary Policy Committee meets on November 3, in a bid to curb inflation, and this could push rates up again as lenders pass on the increase.
The FCA survey has been prepared in order to provide the regulator with an oversight of issues affecting businesses and consumers. It is not known how long the surveys will be collected.
As interest rates rise, the regulator is working with lenders to ensure consumers are treated fairly amid cost-of-living pressures.
Mortgage rates rose rapidly in the wake of the ill-fated Kwasi Quarting budget
Aside from the higher mortgage rates, borrowers have also been affected by the reduced selection of home loans available to them.
Uncertain about how to price products in the aftermath of the Sept. 23 mini budget, some lenders pulled their loans off the market, with lower deposit rates targeting first-time buyers especially.
A week after the tax cuts budget, the number of products on the market dropped 43 percent, to 2,258 loans — the lowest number since May 2010. The number has since risen to 3,063, according to data from Moneyfacts.
Research by Citizens Advice found that one in four mortgage holders would be unable to pay their monthly payments if they rose by £100, and the figure rises to almost half of borrowers if they rise by £250.
The charity also found that one in seven mortgage holders had already cut back on necessities in order to make ends meet.
There are fears of a subprime mortgage crisis as borrowers who get fixed rates would need to remortgage to much higher rates when their deal ends.
What to do if you need a mortgage
Borrowers who need to find a mortgage because their existing fixed-rate deal is coming to an end, or because they’ve agreed to buy a home, are urged to act but not panic..
Banks and building societies are still lending and mortgages are still being accepted with applications accepted.
However, rates change quickly, and there is no guarantee that deals will stick and won’t be replaced by mortgages that charge higher rates.
This is Money’s best mortgage rate calculator powered by L&C that can show you deals that match the value of your mortgage and property.
What if I need to re-travel?
Borrowers should compare rates, talk to a mortgage broker, and be prepared to work to secure a rate.
Anyone with a fixed-rate deal that expires within the next six to nine months should consider how much a remortgage will cost now — and consider a new deal.
Most mortgage deals allow a fee to be added to the loan and then only charged when you take it out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.
What if I’m buying a house?
Those who have agreed to buy homes should also aim to lock in prices as early as possible, so they know exactly what their monthly payments will be.
Homebuyers should beware of overexerting themselves and be prepared for the possibility of home prices falling from their current high levels, due to high mortgage rates limiting people’s ability to borrow.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to talk to a good broker.
You can use our best mortgage rates calculator to show matching deals for your home value, mortgage size, term needs and flat rates.
Be aware that rates can change quickly, so the advice is that if you need a mortgage to compare rates then speak to a broker as soon as possible, so they can help you find the right mortgage for you.
> Check out the best fixed rate mortgages you can apply for