HSBCFeb 28 2023

HSBC points to rate increases after sub-4% launch

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HSBC points to rate increases after sub-4% launch
HSBC said over 20 mortgage products across different loan-to-values would see rate increases tomorrow [ANDY RAIN/EPA-EFE/Shutterstock]
ByRuby Hinchliffe

HSBC is the latest mortgage lender to increase its rates after it made headlines with the market’s first sub-4 per cent interest rate since the "mini" Budget.

The high street bank will launch a raft of new rates tomorrow (March 1), alongside some new products - including three and 10-year fixes to cater for “those looking for mortgage stability”.

In an email to brokers, seen by FTAdviser, HSBC said more than 20 mortgage products across different loan-to-values would see rate increases tomorrow. The increases are yet to be communicated to brokers.

The lender told FTAdviser there are a number of factors that are taken into account when setting mortgage rates. 

“While we have continually reduced hundreds of mortgage rates over the last few months, including rate cuts of up to 0.35 percentage points last week and bringing back the first sub-4 per cent mortgages since September, following a period of rising market funding costs there are some small increases this week on some mortgages,” a spokesperson said.

Currently, the lender is offering existing customers rates as low as 3.86 per cent on a five-year fix.

Gary Boakes, director of Verve Financial, said HSBC’s rates have been very competitive and they are still managing to look at payslips within two working days, which suggests the rate increases are not down to service. 

He added: “Is this as a reaction to the next Bank of England meeting later in March and the likelihood of the base rate going to 4.5 per cent, or the recent increase in swap rates, or both? 

“If this is the case and HSBC are going first then I imagine we will start seeing lenders following suit. 

“Equally, it could just be that they want to increase their margins. Only time will tell and we'll see how the other lenders react.”

Justin Moy, managing director of EHF Mortgages, said the move by HSBC likely reflects the fact swap rates have increased a little over the past few weeks, and other lenders are still reducing rates.

“There will be occasions where we see some mixed messages,” said Moy.

“Mortgage lenders have always managed their workloads by tweaking their rates up or down, depending on market conditions, so lenders that have poked their toes in the sub-4 per cent sea have not stayed too long.”

Managing director at Altura Mortgage Finance, Rob Gill, said with rates having fallen steadily since the start of the year, it seems the market has now reached the end of the current cycle of mortgage lender rate cuts.