Homeowners and potential buyers felt ‘completely helpless’ over the weekend as thousands of people wait to hear whether their mortgage deals will now cost them hundreds of extra pounds a month, while brokers report that people are are already withdrawing from the market or preparing to reduce their workforce.

Chancellor Kwasi Kwarteng’s September 23 mini-budget has seen 40% of mortgage products withdrawn over the past week, with many potential buyers still waiting to find out what they will pay and others being offered rates higher or reduced loan sizes.

“People were worried about the energy crisis and how they were going to heat their homes, but that’s a different kind of fear,” said Michael McLaughlin, a mortgage broker in Northern Ireland. “Now it’s ‘Are we going to have roofs over our heads?’ They just feel totally helpless.

People are reacting to the situation in different ways, he said, with some planning to sell their homes and downsize or move in with family members because they can’t afford the increases in repayments.

Some of McLaughlin’s clients have been paying penalty fees over the past few days to end their current fixed-rate mortgage contract to get a higher rate now, fearing it could go even higher. “It’s because they’re not willing to wait for an even higher rate next year,” he said. “They are paying a penalty to breach their contract to do this.”

Meanwhile, a property company in his area has suspended its planned development, estate agents are reporting fewer bookings for viewings and customers are waiting up to an hour or more to speak to their lenders on the phone.

“It’s like a freezing scare, the speed at which this happened compared to [the housing market crash in] 2008. The collapse was seismic and so quick,” said McLaughlin, who works for Mortgage and Insurance Directions in Newcastle, County Down.

Heather Tang, 34, had already missed out on her dream family home when the buyer chain collapsed earlier this year. She and her family, who are considering moving from London to Macclesfield, Cheshire, have found another property to buy but are now waiting to hear at what mortgage rate they have been accepted. With the sale of their current home progressing and no clarity from the bank, they have been left in the dark about what the future holds.

“We haven’t agreed anything, so I just don’t know what we’re going to do. I see people being offered 6% to 10% [interest rates]said Tang, a librarian. “I know house prices are going down, but they’re not going down that fast, and in the meantime we’re kind of homeless because we still have to sell our house.”

She added: “We really can’t do anything else now. [except wait]. We’re so close to selling our house, we can’t go back and we have to move, so there’s not much else we can do.

Robbie Coffin, 33, an NHS administrator from Aldershot, Hampshire, and his partner had an offer on a two-bedroom bungalow accepted in April. The investigation showed that additional work was needed, so they reduced the offer, which was accepted, meaning that although they had previously agreed to a 2.5% fixed rate deal, their new mortgage has not yet been approved.

“We’re in this massive queue that seems to be getting longer to see if it’s approved, but we don’t know if we’ll be able to afford the mortgage if the rate is higher,” Coffin said. “We’re in limbo, and that’s the worst thing.”

Others have already given up the search. Louise, a project manager who did not want her surname used, had a 2.65 per cent mortgage offer six months ago on a three-bedroom house in Kent with her partner. Last month the seller pulled out, and now rising rates have forced them to postpone any decision to move until 2024. “It’s just not viable anymore, with interest rates rising and travel costs to London,” she said. “A new mortgage offer for the same loan amount would now cost £200 more per month, at least. Meanwhile house prices have risen by another £20,000 [since March]. It’s really hard, but what can you do?

Rightmove, the real estate website, said data showed the number of potential buyers asking to view properties on Monday and Tuesday of last week was down 3% from the same days in the previous three weeks. The number of agreed sales on Tuesday hit its highest level since early August as buyers rushed to secure mortgages before rates rose further.

Marc von Grundherr, director of estate agent chain Benham and Reeves, said: “Those who already have their terms remained largely unhindered, with their sales progressing as expected.

“That’s not to say everyone did, though, and we’ve seen a handful of cases where buyers have had the rug ripped out by banks withdrawing their pre-agreed mortgage offers.”

Additional reporting by Jedidajah Otte

THE FIRST BUYER

Borrow £180,000 out of £200,000 home with a 10% deposit

September 1: NatWest offers a 3.59% fixed rate for two years. The monthly payment would have been £910 per month.

October 1: NatWest offers 4.39% fixed for two years. The monthly payment would be £990 per month.

Cost = £960 per year more

THE OWNER

Remortgaging £300,000 on a £400,000 house

September 1: Coventry building society proposes a rate of 3.39% fixed for two years. The monthly payment would have been £1,484.

October 1: NatWest offers a mortgage rate of 4.3% fixed for two years. This gives a monthly payment of £1,634

Cost = £1,800 per year more

Source: London and Nationwide Mortgage Brokers

“Before, buying our first home seemed difficult, but possible. Now it’s completely out of reach’

Earlier this summer, Alex, a charity worker from Sussex, hoped he and his partner, Jo, could soon buy their first home. The couple currently rent a flat in Brighton, where Jo works in the events business, spending around £1,500 a month on rent, council tax and utilities.

“We had a meeting with a mortgage advisor three months ago,” says the 27-year-old. “We were told we could afford a house just north of £400,000. We were looking for anything with bedrooms and a bathroom, really, this area is expensive. But we were really excited.

“We had another meeting with a mortgage adviser on Friday, just after the mini budget was announced. We discovered that our budget had suddenly dropped to just under £360,000 as we would be considering mortgage rates 5 to 6% It was like a rug was pulled.

“Things have only gotten worse since then. There are no mortgage deals we could ask for at the moment. Previously it seemed difficult but possible, now it is completely out of reach.

Since the initial shock wore off, the couple have searched for homes in areas further away from their jobs, but so far the search has only added to their disappointment.

“We looked at towns and villages 10, 20 miles from Brighton, like Worthing and Littlehampton,” says Alex.

“On Monday we visited a property in Littlehampton, we had booked it for a while. There was literally fungus growing on the floor and all the basement walls were covered in mold. This house cost £400,000 .

Unless the market changes significantly, Alex says, he doesn’t see how they’ll be able to find a property in a commutable area that will be affordable.

Upping their deposit from the existing 20% ​​they had hoped to deposit is the only option, he thinks, but, with a combined household income of around £50,000, whatever they put aside could end up by being overtaken by rising interest rates and real estate prices.

“I sometimes wonder if house prices will drop, which would be great for first-time buyers like us, but terrible for homeowners. Recently I have had to dip into my savings due to rising costs and energy bills. I feel like I’m mourning a loss, because right now I don’t think I’ll ever be able to afford a house.