HSBC to increase mortgage rates 'across the board' from tomorrow in 'hammer blow' to market

HSBC is planning to raise mortgage rates from tomorrow in what’s being described as “another hammer blow” to the UK’s housing market.

This move follows similar decisions by Santander, Coventry, and TSB earlier this week. Although how much these rates will climb is still unknown, they’ll impact both current and new domestic customers across all main loan-to-value and fixed-term brackets. Rising swap rates are seemingly behind these increases. These rates influence how much it costs for lenders to give mortgages.

Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, told Newspage news: “HSBC increasing rates will be the final nail in the coffin for consumer confidence in both the banking system and this government.” She added: “Rates are all over the place, the Bank of England seem to be ignoring the reality of the cost of living crisis and the recent recession announcement. It won’t be long, if not immediately, that the rest of the big six follow suit.”

Ashley Thomas, director at Magni Finance, noted: “HSBC hiking rates is yet another hammer blow to Britain’s beleaguered property market. 2024 started on a high but those days now feel like a distant memory as more lenders reprice upwards.”

Santander has put up the prices for all its fixed rates in the new business range on Wednesday by as much as 0.34 percent. TSB has also raised the prices on its Homebuyer mortgage products and some deals for people switching mortgages by up to 0.30 percent.

Mortgage rates are going up every day. Moneyfactscompare’s daily check-up says the average rate for a two-year fixed home loan is now 5.72 percent, which is a tiny bit more than it was the day before. The average rate for a five-year fixed home loan has gone up too. It’s now 5.3 percent, just a little bit more than yesterday’s 5.29 percent.

Elliott Culley, who helps people get mortgages at Switch Mortgage Finance, said: “The reversal in rates over the past two weeks is a result of lenders cutting rates sharply in January in a bid to obtain as much business as possible.”

“We are now in the hangover period from the rate war we experienced in January. Lenders squeezed their margins so much that any increase in swap rates, as we are now experiencing, would mean a reversal in rates. This shows how fragile the current market is and that borrowers should remain proactive in the market to ensure they secure the best deal.”

Richard Jennings CeMAP, founder and managing director at Richard Jennings Mortgage Services, said the news has brought back last year’s “uncertainty” instead of the expected “sunshine and promise” of January.

He noted: “Unfortunately there will be many consumers who saw rates declining in January and decided to hold off in the hope of getting even lower deals, now finding themselves being bitten by the increased rates.” He added: “I don’t expect this to change anytime soon. Brace yourself for more quick rate removals and repricing at a higher level.”