Last week, multiple lenders temporarily paused new lending and withdraw fixed rate deals as announcements of tax cuts in Chancellor Kwasi Kwarteng’s mini Budget led the pound to fall and swap rates to soar, making it more challenging for lenders to price products.
Moneyfacts figures suggest that over 1,600 mortgage deals were pulled and reported suggested that interest rates could hit seven per cent.
In the interview, Rathi said: “If a product is withdrawn for a temporary period, we want to understand when they’re going to come back to market so that those people who may need to refinance are able to proceed with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 added that the regulator was being “incredibly vigilant” about the financial impact on households from higher mortgage rates.
According to the latest figures from Moneyfacts, the average two-year fixed rate today was 5.75 per cent and the average five-year fixed rate was 5.48 per cent.
This compares to December last year when the average two-year fixed rate was 2.34 per cent and the average five-year fixed rate was 2.64 per cent.
‘Good degree of resilience in mortgage market’
Rathi said that lenders were not reporting a rise in customers falling behind on payments, but the regulator had to be very “vigilant” as financial pressure was coming from multiple sources, not just mortgages.
“We would certainly encourage consumers to engage with the conversation early. Plan ahead, think early. If you have any concerns, contact your lender, make sure you get proper advice.”
He noted that the mortgage market was in a very different state to the one pre-financial crisis as there had been measures like the affordability stress test, with 100 per cent loan to value lending becoming a rarity and households having less debt.
Rathi continued that this had given a “good degree of resilience in the mortgage market” and mainstream lenders were more proactive reaching out and engaging with customers.