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Britain's cheapest mortgages have all but disappeared

Homebuyers left scrambling for cheap deals after the Bank of England raised rates.

Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Homebuyers left scrambling for cheap deals after the Bank of England raised rates.

The best mortgage deals have disappeared from the market as banks have grown nervous about the prospect of further interest rate rises.

Consumers battling rising inflation are struggling to access cheap mortgage deals after four of the lowest rates were withdrawn from sale this week. Leeds Building Society has pulled its 2.42pc five-year fixed-rate mortgage, while Barclays has withdrawn a 2.77pc two-year fix, 2.28pc two-year fix and 2.45pc five-year fix.

Allied Irish Bank's 2.1pc two-year fix now has the lowest rate on the market. This week high street bank HSBC launched two five-year fixed-rate deals, offering rates of 2.34pc and 2.39pc respectively, both with free evaluation and legal work for remortgages.

Longer-term fixes have become increasingly popular in recent months as homeowners have looked to secure their costs amid the cost-of-living crisis.

Pantheon Macroeconomics, a consultancy, said both the growth in house prices and buyer demand were reaching their peak, marking the “start of a more pronounced slowdown”.

Analysts said they expected rates to rise “even further in the months ahead” as households' real disposable incomes continue to fall due to inflation.

“The two-year fixed-rate mortgage rate with a 75pc loan-to-value ratio jumped to 2.35pc in April, from 2.11pc in March and 1.29pc six months earlier, the sharpest six-monthly increase since 2003,” the firm said.

Inflation has just hit a 40-year high of 9pc, meaning households are about to experience the largest drop in real incomes on record. Nationwide estimates the ratio of house prices to earnings is the highest it has ever been.

Earlier this month the cost of an average two-year passed the 3pc mark since March 2015, according to analyst Moneyfacts. This means the average deal is now 0.69 percentage points higher than in December.

A Barclays spokesman said the changes were implemented to “simplify and streamline” its deals. Leeds Building Society said its deal had been pulled due to high demand, adding: “We’ve seen a big increase in the number of applications so needed to take action to maintain planned business volumes.”

This article was written by Tom Haynes from The Telegraph and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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    Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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