HSBC is the latest high street lender to announce it is increasing residential mortgage rates, following Nationwide yesterday, which increased selected fixed rates by up to 0.19%, and Virgin Money by up to 0.14%.
One broker said “the hope is that this is a blip rather than the beginning of a longer term trend” while another warned “what this week’s rate increases show is that borrowers should take nothing for granted”.
With effect from Wednesday 4th February, HSBC’s 2-year 60%–95% loan-to-value (LTV) Home Mover products will increase by up to 0.10%.
The lender’s 2-year 60%–95% LTV First Time Buyer products will also rise by up to 0.10% and selected 5-year fixes will increase by up to 0.07%.
Meanwhile, 2- and 5-year 60%–75% LTV Remortgage fixed rates will increase by up to 0.07%.
Importance of locking in
Andrew Montlake, CEO at London-based mortgage broker, Coreco, said: “HSBC are the latest high street lender to announce they are increasing selected residential mortgage rates this week and other lenders may well follow in the days ahead.
“Swap rates increasing means mortgages get more expensive for borrowers but the hope is that this is a blip rather than the beginning of a longer term trend.
“When inflation does start to fall again, rates should resume their journey south. As ever, this highlights the importance of locking into rates when you can.”
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, cautioned: “What this week’s rate increases show is that borrowers should take nothing for granted. One set of data, in this case the rise in inflation, can quickly see rates change direction.
“A hold from the Bank of England this week is as good as nailed on but when inflation does start to fall, rates could again start to tumble.”
HSBC shows how quickly things can turn
Babek Ismayil, CEO at homebuying platform OneDome, added: “Following the rise in inflation, Swap rates have been nudging up and that repricing is now being felt by the end borrower. Once again, this shift shows how quickly things can turn in the mortgage world.”
Elliott Culley, Director at Switch Mortgage Finance, said rising Swap rates means lenders pricing upwards was inevitable.
He continued: “February has become a key month that could define the rest of the year, and mortgage holders who have rate renewals this year will be praying for good news on inflation data to bring rate reductions back on track.”
Omer Mehmet, Managing Director at Welling-based Trinity Finance, said: “What started as a trickle is now turning into a stream. Stubborn inflation and the prospect of the Bank of England keeping rates higher for longer is driving this repricing.”
Justin Moy, Managing Director at EHF Mortgages, added: “HSBC are the latest lender to react to the increase in Swap rates, driven primarily by the suggestion that inflation will be higher than expected over the coming months, scuppering the chances of further base rate cuts.”
