City regulator sending weekly survey to mortgage lenders to monitor interest rates and ensure customers are treated fairly amid uncertainty
- Weekly surveys are designed for the regulator to monitor the market
- The data will not be published and only be used for regulatory purposes
- Since 23 September’s mini-Budget mortgage rates have increased rapidly
- However, some lenders are now reducing them slightly
City regulator the Financial Conduct Authority (FCA) is sending weekly surveys to mortgage lenders to collect information on rates and availability amid fears of a mortgage crisis.
As the regulator for mortgage lenders and administrators alongside the Prudential Regulatory Authority (PRA), the FCA is keeping in touch with lenders on a day-to-day basis in order to monitor the market.
The survey asks about whether the lender has made any changes to interest rates or withdrawn any products.
Checking up: City regulator the FCA is collecting information on mortgage rates from lenders every week, including asking them when products have been removed from the market
In the weeks following the then-Chancellor’s ill-fated mini-Budget on 23 September, mortgage rates rose significantly, with the average two-year fixed rate across all LTVs reaching a peak of 6.65 per cent on 20 October, according to Moneyfacts.
The last time the average two-year fixed rate mortgage was 6.5 per cent or more was back in August 2008 at 6.94 per cent.
It has since dropped, with some lenders including Natwest and HSBC announcing rate reductions. On 28 October the average two-year fix had come down to 6.48 per cent.
However, the Bank of England is expected to raise its base rate by 0.75 per cent when its Monetary Policy Committee meets on 3 November, in a bid to curb inflation, and this may see rates tick up again as lenders pass on the hike.
The FCA’s survey has been set up in order to provide the regulator with an oversight of of the issues affecting firms and consumers. It is not known how long the surveys will be collected for.
As interest rates have risen, the regulator has been working with lenders to ensure consumers are treated fairly amid cost of living pressures.
Mortgage rates have risen rapidly in the wake of Kwasi Kwarteng’s ill-fated budget
Aside from rising mortgage rates, borrowers have also been affected by a reduction in the choice of home loans available to them.
Uncertain of how to price products in the the aftermath of the mini-Budget on 23 September, some lenders withdrew loans from the market, with low-deposit rates aimed at first time buyers being particularly badly hit.
A week after the tax-cutting budget the number of products on the market had fallen 43 per cent, to 2,258 loans – the lowest figure 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 will be unable to make their monthly payments if they rise by £100, the figure rises to nearly half of borrowers if they go up by £250.
The charity also found that one in seven mortgage holders had already cut back on essentials in order to make ends meet.
There are fears of a mortgage crisis as borrowers on a fixed rates need to remortgage to much higher prices when their deal comes to an end.
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate deal is coming to an end, or because they have agreed a house purchase, have been urged to act but not to panic.
Banks and building societies are still lending and mortgages are still on offer with applications being accepted.
Rates are changing rapidly, however, and there is no guarantee that deals will last and not be replaced with mortgages charging higher rates.
This is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value
What if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate.
Anyone with a fixed rate deal ending within the next six to nine months, should look into how much it would cost them to remortgage now – and consider locking into a new deal.
Most mortgage deals allow fees to be added the loan and they are then only charged when it is taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.
What if I am buying a home?
Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be.
Home buyers should beware overstretching themselves and be prepared for the possibility that house prices may fall from their current high levels, due to higher mortgage rates limiting people’s borrowing ability.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.
You can use our best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.
Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage to compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you.
> Check the best fixed rate mortgages you could apply for