Explain decision to pull mortgage products, FCA warns lenders
The chief of the City watchdog has fired a warning shot at lenders after they pulled mortgage products from the market in droves this week amid extreme market volatility.
More than 40 per cent of available mortgages were withdrawn from the market after the government’s tax-cutting plans spooked markets and left lenders unable to accurately price lending.
The chief of the Financial Conduct Authority, Nikhil Rathi, has now warned lenders that the regulator will demand an explanation as to why products have been withdrawn.
“If a product is withdrawn for a temporary period, we want to understand when they’re going to come back to market so that those people who may need to refinance are able to proceed with their plans,” he told the Times in an interview
He added the FCA was being “incredibly vigilant” over the impact of rocketing rates on households.
The cost of mortgages soared last week as financial markets reacted to Kwasi Kwarteng’s so-called mini budget, with forced lenders to scramble to reprice their products.
More than 1,600 products have now been pulled from the market, according to Moneyfacts. Most products are expected to return but with significantly higher rates attached.
The plans have caused economists to now ramp up their forecasts for interest rates amid fears the government’s plans will further fuel inflation. The Bank is now predicted to hike rates to as high as six per cent next year to tame price increases.