Mortgage withdrawals

Over the last 2 weeks there have been more and more lenders either increasing their mortgage rates or, even worse for consumers, withdrawing their most competitive mortgage deals altogether.

Some lenders have started to increase mortgage rates by over 0.5 per cent, the highest I've heard of last week was a 0.6 per cent interest rate increase. This is very bad news for homeowners and these lenders are some of the biggest mortgage providers in the UK.

These mortgage companies are trying to protect their profits or lack of it since the US credit crunch hit financial markets in the UK. I think some of these major mortgage lenders may end up damaging their brand if they cut out competitive deals for their customers. In fact one of the lenders admitted in a press release that they had withdrawn their fixed rate mortgage because it was so popular and they couldn't afford to continue offering it! The lender in question withdrew a very competitive, 4.99 per cent two year Fixed Rate mortgage as from the close of business on Saturday 29 March 2008.

Unfortunately this may spark panic for the 1.5 million people who are due to remortgage this year. It would be a good idea to start comparing mortgages as soon as you realise you might be coming towards the end of your fixed rate mortgage deal. I would say 6 months beforehand is not too early to start looking and many lenders will allow a mortgage application to stand for 3 to 4 months, with the rate offered. This means you could get a fully submitted mortgage application accepted in say April but hold on until your current deal runs out, in say June before you sign your new mortgage application. If you have a good percentage of equity in your home and a good credit rating most lenders will want your business so it will pay to shop around for the best mortgage deals.

Rate increases or product withdrawals; either way, this is the last thing the 1.5 million remortgagers in 2008 need, more lenders pulling their most competitive mortgage rates