A North East building society has pulled all of its mortgage deals after the UK economy was plunged into turmoil.
Newcastle Building Society confirmed that it has withdrawn its entire range of mortgages because of the “volatile” market conditions, amid a crisis sparked after Chancellor Kwasi Kwarteng announced a raft of tax cuts and increased borrowing in his mini-budget last week. The decision came as the Bank of England launched an emergency intervention on Wednesday to avert a “material risk to UK financial stability”, while homeowners and prospective buyers have been left worrying about a major hike in prices.
John McCabe, chief executive of the North East England Chamber of Commerce, warned that it was “looking increasingly difficult” for financial markets to regain trust in the UK economy. A record number of mortgage deals were pulled overnight, with Moneyfacts.co.uk reporting that 935 fewer packages were available nationwide on Wednesday compared to the day before.
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That included all mortgages offered by the Newcastle Building Society, with anyone looking for products on its website on Wednesday met with a message reading: "Sorry, no mortgages match your search criteria." Stuart Miller, chief customer officer at the Cobalt Park-based firm, said: “Volatile market conditions are making it extremely challenging for lenders to price fixed rate mortgages.
"We’ve been carefully looking at what that means for our mortgage products and it has led us to withdraw our product range whilst we wait for the market to stabilise. We will continue to progress cases where a mortgage offer has already been issued and we’ll look to launch a new range of products as soon as we can.
"Borrowers nearing the end of their current fixed rate should contact their mortgage broker or lender as normal. We know some of the headlines and economic forecasts can be concerning, especially on top of rising food and energy prices.
"Anyone worried about being able to pay their existing mortgage should contact their lender who will be able to help with tailored support. Newcastle Building Society customers with any query about their mortgage can talk to us on 0345 601 0014 or visit www.newcastle.co.uk for more options.”
Prime Minister Liz Truss and Mr Kwarteng have faced demands to recall the House of Commons in response to the financial chaos, with Labour leader Sir Keir Starmer saying the new government had “clearly lost control of the economy”. The Bank of England announced that it was stepping in to buy government bonds at an “urgent pace” in an effort to restore stability to the economy.
Having seen the pound fall to a record low against the dollar on Monday, Mr McCabe called on the government to provide a “clear strategy” that would reassure markets.
He told the Local Democracy Reporting Service: “The overall effect of a weak pound will be to add more inflationary pressure on businesses that are already facing sharply rising costs. Products and services that are imported from abroad are going to be more expensive and with the ongoing cost of living crisis these costs can’t be passed on to consumers.
“The government needs to set out a clear strategy in order to reassure the markets. It’s looking increasingly difficult to regain such confidence while the UK’s economy is being driven with both the accelerator of the government’s stimulus package and the brake of the Bank of England’s interest rate policy pushed hard to the floor.”
The government has so far shown no intention of reversing the policies announced on Friday, despite the increasing pressure. Financial secretary Andrew Griffith told Sky News that the new administration’s approach was the right one “because those plans make our economy competitive”.
He added: “Get on and deliver that plan. That’s what I, the Chancellor and my colleagues in Government are focused on is getting on and delivering that growth. That is what is going to allow consumers to benefit. In the meantime, we are protecting every household and every business from the biggest macro shock out there at the moment, which is the cost of energy.”
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