The fallout from the pound's crash prompts UK banks to pull mortgage deals as they brace for interest rate hikes
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- Several UK lenders have pulled mortgage deals as they expect interest rates to rise, reports said.
- They believe the Bank of England could hike rates after the pound crashed to record lows.
- Halifax, Virgin Money and Skipton Building Society are among the lenders withdrawing deals, per reports.
The crash in the British pound has lifted expectations that the UK central bank will hike interest rates — and that's prompted a wave of UK banks to pull mortgage deals.
"We have temporarily withdrawn our mortgage range to new customers. This is so we can reprice following the market response over recent days," Skipton Building Society told Insider.
Virgin Money has also put its mortgages on hold for new customers, while the UK's biggest mortgage provider, Halifax, will temporarily remove products that come with a fee from Wednesday.
More than 350 mortgage products have been pulled from the market since Friday, according to consumer financial information provider MoneyFacts. On Friday, the UK government revealed its debt-financed plan for big tax cuts, spurring a slide in sterling.
After the pound plummeted to a record low on Monday, calls have risen for the Bank of England to bring in an emergency interest rate hike to support the UK currency. Higher interest rates strongly impact the mortage market, as the cost of borrowing goes up given they track moves in the BoE's base rate.
The uncertainty around the BoE's next move has presented problems for mortgage lenders, making it more difficult for them to price their products accurately.
The central bank's governor, Andrew Bailey, said in a statement Monday the BoE wouldn't hesitate to change interest rates as much as needed to cool red-hot inflation. He also said policymakers will assess the fall in sterling at its November meeting and act accordingly.
But Bailey stopped short of calling an emergency meeting ahead of the central bank's next scheduled gathering on November 3.
Several smaller mortgage providers — Clydesdale Bank, Scottish Building Society, Paragon, Leek United Building Society, Skipton Building Society and The Nottingham for Intermediaries — have pulled some deals for now, the Telegraph reported.
Mortgage lenders told Insider they will monitor the situation closely, and some plan to launch new product ranges soon.
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