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More mortgage providers pull deals over rate rise fears | Business News

Two more of the biggest mortgage providers have suspended deals as the Bank of England signalled it would raise interest rates to rein in inflation after the chancellor’s mini-budget.

Santander and HSBC withdrew mortgage products on Tuesday as the Bank’s chief economist indicated it would hike interest rates to new highs in November and the cost of UK government borrowing rose.

Nationwide announced a price increase in its two, three, five and 10-year fixed rates by between 0.90% and 1.2% from Wednesday. Existing customers looking to switch to a new deal would have lower increases, of 0.55% to 0.85%, the lender said.

The announcements came after Halifax, the biggest mortgage lender in the country, withdrew fee-paying mortgages, where customers pay a fee for a lower interest rate, on Monday.

The pound fell to record lows against the dollar on Friday after Chancellor Kwasi Kwarteng announced extensive tax cuts funded by government borrowing in a mini-budget announcement.

On Tuesday, Huw Pill, the Bank of England’s chief economist, said the mini-budget would require “a significant monetary policy response”.

“I think it’s hard not to draw the conclusion that all this will require a significant monetary policy response. Let me leave it there,” Mr Pill said.

Santander is to temporarily remove its 60% and 85% loan to value (LTV) products from the market and announced increased rates for new and existing customers, which are to be in place from 10pm on Tuesday. Customers who have already applied before that time will not be affected.

Most of the lender’s new residential and buy to let fixed rates will increase by up to 0.40%, Santander said, and product transfer fixed rates will increase by up to 0.30%.

“We continually review the products we offer in light of market conditions,” Santander said.

HSBC temporarily removed from sale new residential and buy to let products “with immediate effect” on Tuesday.

In all, there are about 365 fewer mortgages on offer on Tuesday than there were on Friday, according Money Facts, a financial information company.

More smaller lenders also removed mortgage products from the market on Tuesday.

Aldermore ceased offering all mortgages on Tuesday, following similar announcements from Virgin Money and Skipton on Wednesday.

Yorkshire Building Society will also withdraw its range of mortgages from new customers at 8pm on Wednesday “as a result of the current volatile market conditions”.

All applications submitted before that deadline will continue while existing customers coming to the end of their current deal will still have access to the product transfer range.

Cost of living: Retail sales recover slightly in July with 0.3% rise but but long-term decline persists | Business News

UK retail sales rose in July but the longer-term downward trend in consumer spending shows no sign of abating, official data shows.

Sales increased by 0.3% in July, which was much higher than economists’ forecasts of a 0.2% drop, according to the Office for National Statistics.

But sales fell by 1.2% in the three months to July when compared with the previous period, continuing the decline since last summer.

Sales are 3.4% lower than last July in further evidence that people are tightening their belts in the face of the cost-of-living crisis.

A revision of June’s retail figures also put sales slightly lower, with a 0.2% drop rather than 0.1%, in a sign that shopping activity was slower than previously thought, the ONS reported.

ONS director of economic statistics Darren Morgan said: “Retail sales nudged up very slightly in July, but looking at the longer-term picture, they are continuing the downward trend which started last summer.

“Online sales did pick up this month, as retailers told us that sales were boosted by a range of offers and promotions.

“However, fuel sales fell with some evidence suggesting the very hot weather meant fewer people travelling.

“Clothing and household goods sales declined again, with feedback continuing to indicate consumers are cutting back due to increased prices and concerns around affordability and cost of living.”

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What is driving the inflation spike?

Read more:
How everyday items have risen in price in the past 12 months
Three things that need to happen for prices to return to normal

It comes as new research indicated consumer confidence is at an all-time low in light of “acute concerns” about the soaring cost of living and bleak economic outlook.

The Bank of England has warned that escalating inflation is likely to tip the UK into recession later this year.

The Consumer Prices Index (CPI) soared to 10.1% in the 12 months to July, up from 9.4% in June and remaining at the highest level since February 1982, driven by an increase in food prices on top of previous sharp rises in household energy bills.

Cost of living: People fear ‘awful winter’ as bills continue to rise | UK News

If people are struggling to pay their bills now – during a hot summer – how much worse will it be in the winter when homes need to be heated?

From the stories Sky News viewers have been telling, it is clear that as soon as temperatures begin to drop, the crisis will worsen significantly.

After bills, one viewer said he and his partner are left with “£3 for three weeks to live on”.

Another said he and his family are reducing the amount of food they buy, not travelling to see family members, and limiting the children to one hour on the TV or computer.

Keith Ashworth, 66, from Nottingham, is fuelling his years old Land Rover with vegetable oil because diesel is so expensive.

“I was hoping to go part-time fairly soon – but I don’t think that’s going to happen. I’m working really just to make ends meet,” he said.

At the end of the month, there is “very little left – sometimes nothing left”.

He and his husband Daryl are collecting “scraps of wood” to use in their wood burner in the winter and considering selling the static caravan they own in the Peak District where they go for a break.

“There’s no light at the end of the tunnel – it’s just going up and up and up,” Keith added.

Daryl and Keith Ashworth say they are 'counting the pennies'
Image:
Daryl and Keith Ashworth are ‘counting the pennies’

Tracey Blanc, from Clitheroe, emailed about how her energy costs had risen ten-fold in a month. She sent a copy of her bill showing £58 was taken by direct debit on 1 July, while on 1 August it was £611.

Viewer Melanie texted about her hours at work, which had been reduced, and said as she was also unable to find a new lodger, she had ended up draining her savings.

She is now working three jobs, including nights and weekends.

“It’s going to be an awful winter,” Susan Pilkington said.

‘I’ve never been more afraid in my life’

A carer who has been unable to work for eight years, Susan, said she has “never been more afraid in (her) life”.

Her energy bills have “doubled” and she has asked her supplier to remove her gas meter because she “can’t afford the standing charge never mind the gas itself”.

Read more:
Sixteen million people cut back on food and essentials
Child poverty in key worker households is increasing, study suggests

Viewer Simon texted to say he wants to take his children on holiday, but only has 52p left in his account.

Kev, 50, texted to say he lives alone in a one-bedroom flat and claims Universal Credit.

“I’ve had to stop paying my water bill and TV licence just to survive,” he said.

“All my money is for rent and electricity bill.”

Glenn took aim at fuel and utility companies making large profits, saying the cost of living crisis is being driven by “greed and bonuses”.

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Julie Martinez emailed to say she works as a health care assistant on a psychiatric ward doing 13-hour shifts and is getting into debt on her credit card for using the money to pay for her petrol to get to work.

“I have no money left over at the end of the month, and I am struggling to feed myself,” she said.

“I feed my dog before I feed me.

“I feel at breaking point. Something has to give or people are going to end up homeless.”

House prices continue to rise – up for the 12th month in a row | Business News

Annual house price growth in the UK accelerated to 11% in July, slightly up from the 10.7% seen in June, according to new figures.

House prices increased by 0.1% month-on-month – the 12th consecutive monthly increase – according to Nationwide Building Society.

The average house price in July reached £271,209.

Robert Gardner, Nationwide’s chief economist, said the housing market had been surprisingly buoyant so far, given the strains on households’ budgets and consumer confidence plunging to a record low.

He added: “We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters, with inflation set to reach double digits towards the end of the year.”

Marc von Grundherr, director of London estate agent Benham and Reeves, said: “You’d have thought that having gorged themselves on a feast of mortgage affordability and stamp duty reductions during the pandemic, the appetite of the nation’s homebuyers would be dwindling.

“This clearly isn’t the case and even a string of consecutive interest rate hikes are yet to taint their taste buds as they continue to pile their plates high – pushing house prices to record highs in the process.

“With the bricks and mortar buffet on offer remaining understocked with regard to the level of homes available, we can expect property prices to remain robust even against an uncertain economic backdrop.”

‘Market momentum remains unwavered’

James Forrester, managing director of Barrows and Forrester, added: “Market momentum remains unwavered, having weathered a prolonged period of Brexit uncertainty, a global pandemic, increasing inflation and the most incompetent prime minister in living memory.

“All things considered, it seems as though nothing short of an apocalypse can bring the property market to its knees.”

But managing director of HBB Solutions, Chris Hodgkinson, said: “While house prices remain sky high, home sellers would be well advised to fasten their seatbelts as we’re likely to witness a period of heightened turbulence before the year is out.

“Buyer demand levels are already starting to wane and when the well runs dry, home sellers will have to adjust their asking price expectations in order to secure a sale, as a perfect storm of increasing mortgage costs, record inflation levels and the steep cost of living all put pressure on the UK property market.”