HSBC will raise fixed-rate residential and buy-to-let loans tomorrow (23 February), which looks set to see the last of sub-4% prices withdrawn by mainstream lenders.
The bank’s changes will include:
Existing residential customer switching
- Two- and three-year fixed fee savers at 60%, 70%, 75%, 85%, 90% and 95% loan to value will rise
Residential first-time buyer/homemover
- Two- and three-year standard fixes at 60%, 70%, 75%, 85% and 90% LTV will rise
Residential remortgage
- Five-year fixed fee savers at 60%, 70%, 75% and 90% LTV will rise
Existing BTL customer switching/borrowing more
- Two- and five-year fixed fee savers at 60%, 65% and 75% LTV will rise
BTL purchase/remortgage
- Two- and five-year fixed fee savers at 60%, 65% and 75% LTV will rise
John Charcol head of marketing Nicholas Mendes says: “HSBC’s latest reprice was inevitable following competitor movements in recent days. Having the Best Buy rate over a weekend is risky business, as this would have resulted in being overwhelmed with applications.
“I expect we will have a few weeks of mortgage rates adjustments, as lenders will be busy balancing margin and volume to ensure this latest hiccup in rates doesn’t dampen the new year demand.
“Sub 4% deals will be off the cards temporarily, but once some positive data feeds back into market confidence, pricing will slowly edge back down.”
L&C Mortgages associate director David Hollingworth points out: “HSBC has been offering rates that have been there or thereabouts for some time now and has so far held firm while other lenders have edged fixed rates up.
“That includes the leading benchmark rate for five-year fixed rates at 3.99%, the last five-year fix below 4%.
“There has been a large amount of pricing activity with lenders shifting rates regularly to adjust to the fact that markets now anticipate that base rate may take longer to fall than had previously been hoped.
“This has forced fixed rates back up as funding costs have risen leading to HSBC being the last lender standing in the sub 4% bracket.
“That may catch some borrowers by surprise when the rate story this year has generally been one of falling rates.
Hollingworth adds: “This could feel like a retrograde step for borrowers but it is a far cry from the very rapid and steep increases that we saw post mini-Budget and again last summer.
“Market rates aren’t skyrocketing in the same way that would force a sharp and significant rise in borrowing costs, but it is enough that lenders are having to adjust in the face of higher funding costs.
“I expect there will still be plenty of jockeying for position as the market remains extremely competitive, but in the short term we may still see more movement in mortgage rates.”
“Of course, there remains an expectation for the base rate to be cut this year but the question mark remains over when that may come.
“We may well see market rates bobble around as new data is revealed, but for now at least anyone that was holding off in the hope of further cuts may want to reassess their position.”
