Habito and Atom Bank withdraw their mortgages

Friday 30 September 2022 13:18 CET | News

Fintech mortgage lenders Habito and Atom Bank pull their mortgages in the wake of Chancellor Kwasi Kwarteng’s mini budget that triggered turmoil.

With some 40% of available UK mortgages being withdrawn by lenders, thousands of borrowers are searching for options to avoid property sales and remortgages from falling through.

Habito had previously offered its Habito One long-term fixed-rate mortgage at terms of up to 40 years, Atom Bank on the other hand offered more traditional mortgages of up to five-year terms, but only via mortgage brokers.

Habito is currently warning customers on its website of call delays of up to 60 minutes.

Molo Finance, another fintech lender, had offered a FlexLife mortgage that was available on terms between 15 and 40 years, but paused its lending in Q2.

Before the withdrawal Molo had been offering rates of between 2.92% and 4.5% depending on duration.Following Wednesday’s Bank of England intervention to start buying some GBP 65 billionn worth of UK gilts, markets have started to settle and if the trend continues lenders might be able to start pricing new mortgages more accurately soon.

House sales collapse

Deals for house purchases are collapsing after lenders pulled mortgage offers in response to soaring interest rates.Traders are betting the Bank of England will raise its key interest rate to 5.9% by September 2023, compared with 0.1% in 2022, sending home loan costs spiralling for the 1.8 million people who need to remortgage in 2023.

Habito and Atom Bank have pulled their mortgages in the wake of Chancellor Kwasi Kwarteng’s mini budget that triggered turmoil.

Lenders began suspending products on 26th September 2022 as they struggled to price them amid the uncertainty on financial markets – and the volatility and number of offers being removed have snowballed.

The latest data from Moneyfacts, which monitors the sector, revealed that 321 mortgages had been withdrawn overnight, taking the total to 1,621, with 2,340 remaining on sale. During the previous 24-hour period, 935 packages were pulled, double the previous record of 462 at the start of the pandemic lockdowns.

Some of the biggest lenders said they would be revising their offers within days, while others preferred to wait until the financial markets had calmed.

Rising interest rates affecting existing mortgages

People on a variable-rate deal – meaning the interest on the mortgage changes in line with the Bank of England’s interest rates – will see the amount they pay monthly go up. Just over a fifth of all mortgage holders are on a variable-rate deal, meaning about 1.9 million homeowners will be hit with a rate rise.

Borrowers who opted for a long-term fixed-rate deal in recent months will be protected for the length of the term. However, anyone coming to the end of their fixed-rate deal will see a considerable rise in their bills.

The price of new fixed-rate mortgages had already been shooting up in recent months. A year ago, at the height of the mortgage price war, it was possible to lock into an interest rate of less than 1% for two or even five years. The likes of Halifax were offering two-year fixes priced from 0.83% and five-year fixes from 0.98%.

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Keywords: fintech, banks, regulation, digital banking, online banking
Categories: Banking & Fintech
Companies: Atom Bank, Habito
Countries: United Kingdom
This article is part of category

Banking & Fintech

Atom Bank



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