In all, 935 mortgage products were withdrawn from the market on Tuesday, according to data from money comparison site MoneyFacts.

Photo by Richard Baker | In pictures | Getty Images

LONDON – Hundreds of UK residential mortgage deal offers have been pulled after market turmoil sparked concerns that prime rates could rise to 6% next year.

A total of 935 mortgage products were withdrawn from the market on Tuesday, according to data from money comparison site MoneyFacts. The previous high was 462 when the first UK Covid lockdown was announced in 2020, the biggest daily drop ever, the company said.

HSBC and Santander are the latest major UK lenders to pause their mortgage product offerings, while NatWest revisits its products, raising rates.

Santander said it stopped some products for new customers and raised rates for both existing and new borrowers but would review its decisions “in light of market conditions”.

NatWest and HSBC did not immediately respond to CNBC’s requests for comment.

Earlier in the week, Virgin Money, Halifax and Skipton Building Society temporarily pulled some of their mortgage deals, citing market developments.

Concerns about unaffordable mortgage rates have increased among borrowers and lenders. There have also been reports of home sales falling due to market uncertainty as lenders backed off previously agreed mortgage deals.

UK bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarteng presented his “mini-budget” on Friday. Following his announcement, which included major tax cuts and a shift to “trickle-down economics”, the British pound hit an all-time low against the dollar on Monday morning.

Meanwhile, the yield on UK 10-year gilts hit a 14-year high earlier in the week. These major market movements fueled inflationary fears among investors and led to confidence that the Bank of England would implement further interest rate hikes.

The central bank said on Wednesday it would intervene in the bond market and temporarily postpone the sale of gilts while buying bonds.

The market quickly priced in the base rate as high as 6% for next year – dramatically increasing how expensive mortgages are for borrowers as the base rate is the benchmark for UK mortgage and loan products.

‘Creditors would be wise to remain silent’

A research note from Pantheon Macroeconomics suggests that for households looking to refinance to a two-year fixed rate mortgage, payments could rise to £627 ($670) per month.

Concerns have also been raised about borrowers having fewer options when trying to find a mortgage deal due to market turmoil, which could drive up prices even further.

Despite this, MoneyFacts finance expert Rachel Springle said borrowers should not panic.

“Borrowers would be wise to remain calm on the current volatility in the mortgage market and seek the advice of an independent broker. Various lenders have made it clear that their decision to withdraw products is a temporary measure amid uncertainty over interest rates,” Springle said.

Speaking to CNBC’s “Street Science Europe” on Tuesday, Imogen Bachara, head of UK rate strategy at NatWest, echoed a similar sentiment, explaining that the pullback in mortgage products is a temporary issue related to short-term market volatility.

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