Mortgage chaos continues as HSBC raises prices for second time in a week
HSBC will raise the price of its mortgages for the second time in less than a week as lenders expect interest rates to rise to 5.75% by the end of the year(Aaron Chown/PA)
/ PA ArchiveSBC will raise the price of its mortgages for the second time in less than a week as lenders expect interest rates to rise to 5.75% by the end of the year.
The banking giant pulled its mortgage products offered via brokers last week as it repriced deals after UK gilt yields surged higher, signalling expectations that the Bank of England will keep interest rates higher for longer amid stubborn inflation. The gilt market is widely used by mortgage lenders to price their deals.
It hastily withdrew mortgages before its planned deadline before reintroducing deals at a higher rate. Brokers complained that the hurried withdrawal led to some home purchases falling through.
However, after gilts surged further - beyond even the level reached after last year’s disastrous mini-Budget - the lender has now pulled its products again and will reintroduce them at an even higher rate.
Today the bank told told brokers at just after 10am it will reprice its mortgages again. Its products for new customers and buy-to-let loans will remain available until midnight tonight, while new residential applications via brokers will be suspended at 5pm.
The new prices will be announced tomorrow morning.
An HSBC spokesperson said: “We're firmly focused on supporting customers through current pressures and providing access to good deals. However, over recent days cost of funds has increased and, like other banks, we have had to reflect that in our mortgage rates.”
Coventry Building Society also announced today that it would reprice its mortgages again.
The new rates will hit millions of homeowners whose existing fixed deals are set to expire soon. The average new two-year fixed-rate mortgage carries a 5.9% interest rate, but most mortgage holders are currently still paying less than 3% in interest.
Thousands of mortgage holders will this summer face having to remortgage deals taken out when they could borrow at around two per cent resulting in huge increases in their monthly bills.