Borrowers told to act fast over mortgages

As the flood of mortgages being pulled extended today to competitively priced products from a range of building societies, advisers said customers were having to move quickly before the most attractive deals disappear.

Brokers said they were encouraging customers to buy their products sometimes several months in advance.

Richard Morea of London & Country mortgages said: "Until recently, the companies would tell us with plenty of notice if they were planning to withdraw a product so we could ring up the client and warn them. Now we don't even get told in advance. It's just gone."

As many mortgages are guaranteed for up to six months, customers who think rates are going up can reserve a deal now even if their current mortgage deal does not expire until late summer.

Morea said: "What we're saying is, if you like this offer, grab it now even if you don't need it for a few months."

In the past two days, more than 570 mortgages have been withdrawn.

Last night saw Nottingham Building Society pull its buy-to-let two and three-year tracker, while the West Bromwich withdrew all its mainstream and buy-to-let mortgages, replacing them with more expensive options.

Darlington Building Society also withdrew its fixed products while Skipton announced plans for a £799 fee to its standard variable rate.

First Direct, the internet and telephone bank owned by HSBC, this week closed its doors on new mortgages, while Nationwide has jacked up rates for many borrowers, particularly first-time buyers.

Rob Clifford, of broker Mortgage-force, cautioned: "Can you rely upon a quote from a lender? The answer is no.

"Lenders are not obliged to honour quotes and could elect to reject all applications or offer less attractive deals.

"Consumers haven't got a cast-iron deal unless they have received a formal mortgage offer from the lender."

The Bank of England yesterday warned that almost half of all lenders will ration mortgages over the next three months.

It recently conceded that two interest rate cuts since December, from 5.75% 5.25%, had done nothing to reduce mortgage costs as banks and building societies put up their own rates. The Bank is under growing pressure to cut rates to 5% next week.

The squeeze on credit by mortgage suppliers - and the prospect of job cuts in the City - is already hitting the housing market. The International Monetary Fund warned British house prices are overvalued by almost 30%.

Default rates on mortgages are expected to rise sharply this year.

Philip Shaw of Investec said: "The situation has deteriorated further and that's consistent with the news over the past few days that mortgage lenders have been raising their rates and withdrawing products.

"Overall we feel there is a very strong case for rates coming down next week."