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"Better rates for people with smaller deposits is good news so hats off to HSBC"

ended 21. October 2024

Some good news for borrowers with smaller deposits came today, as HSBC revealed that, from tomorrow (22 October), many higher loan-to-value mortgage rates — of 80% and above — are decreasing.

However, the news wasn't so good for borrowers with larger deposits and more equity, as the lender announced that many rates at lower loan-to-values are going up. Brokers welcomed the rate changes overall, as they suggest a major lender is confident about the direction of house price travel.

Ben Perks, Managing Director at Orchard Financial Advisers, said: As most lenders make rate increases across the board, HSBC are decreasing rates for anyone borrowing more than 80% of their property value. It'll benefit plenty of borrowers and it's always great to see the word 'decreasing' when we get rate change emails."

Rohit Kohli, Director at The Mortgage Stop, added: "This suggests confidence in the property market and aims to make borrowing more accessible to first-time buyers and those with less equity. On the other hand, those with lower LTV ratios will see their borrowing costs increase, though this may simply be HSBC adjusting its business levels rather than indicating a broader market trend. Balancing risk and demand is likely behind these varied adjustments.”

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11 responses from the Newspage community

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Ranald MitchellVerified
Director at bad credit mortgage specialists Charwin Mortgages
HSBC’s latest mortgage rate changes present a clear divide. While higher loan-to-value borrowers, including first-time buyers, will welcome the rate cuts, the majority of HSBC's existing customer base — those with lower loan-to-values — are facing increases. It’s likely the bank is balancing risk in anticipation of future economic shifts, but for many loyal homeowners these rises will feel like a squeeze, particularly as they’ve consistently met their mortgage commitments. The message seems clear: new buyers may benefit, but existing borrowers will be paying more for their loyalty.
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Darryl DhofferVerified
Founder at The Mortgage Geezer
Better rates for people with smaller deposits is good news so hats off to HSBC. We don't yet know the rates but the fact they're coming down at higher loan-to-values of 80% and above suggests a major lender is confident about the direction of house price travel, and is perhaps looking beyond the Budget. How long these last, of course, is anyone's guess.
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Tony CastleVerified
Managing Director at PFG Mortgages
This is an interesting move by HSBC to reduce some rates above 80% loan to value. Generally, with higher risk lending, we would expect those rates to be the first to increase so this move slightly bucks the trend. It will make great reading for first-time buyers with smaller deposits or those simply looking to remortgage with less equity.
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Ben PerksVerified
Managing Director at Orchard Financial Advisers
HSBC come storming in like a Knight in shining armour for higher risk borrowers this morning. As most lenders make rate increases across the board, HSBC are decreasing rates for anyone borrowing more than 80% of their property value. There is almost certainly a sprinkle of strategy here, after all they are a mortgage lender and not a fictional hero. First-time buyers are some of the most active at the moment, so they want to secure these customers. The profit margin can also be more lucrative at the top end, so there's a good opportunity to make a few quid and balance the books. Ultimately, who cares. It'll benefit plenty of borrowers and it's always great to see the word 'decreasing' when we get rate change emails.
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Katy EatentonVerified
Mortgage & Protection Specialist at Eatenton Finance
It was only a matter of time before HSBC repriced as they were the only lender from the Big 6 that didn’t increase their rates last week. At least it isn’t all doom and gloom and there are still some reductions at higher loan-to-values. Anything that helps people with smaller deposits will be welcomed, as affordability is challenging for many borrowers at present.
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Patricia McGirrVerified
Founder at Repossession Rescue Network
HSBC’s latest move is a hug for some borrowers and a slap in the face for others. First-time buyers and those with smaller deposits are the clear winners. Lowering higher LTV rates throws them a lifeline just when financial pressure on household budgets is mounting. It’s smart banking and good timing. Sadly, those who’ve saved for bigger deposits are being penalised with higher rates. It’s a sharp shift that feels counterintuitive. Why punish those who’ve done the hard work? HSBC is clearly betting on a base rate drop and future house price growth. It’s a bold statement of confidence in the property market, despite economic uncertainty. All that remains to be seen is what the actual changes will be.
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Dariusz KarpowiczVerified
Director at Albion Financial Advice
HSBC's latest mortgage shuffle looks like a high-stakes poker game - raising rates for the safe bets while sweetening the pot for the riskier ones. This counter-intuitive move speaks volumes about their market confidence. The bank appears to be playing a clever balancing act, positioning itself ahead of both the anticipated Bank of England rate cut and the looming Autumn Budget. By lowering rates for higher LTV mortgages while nudging up those for lower LTVs, HSBC is effectively redistributing its risk portfolio while showing remarkable confidence in property values. This strategic repositioning suggests HSBC sees the housing market remaining robust, despite Budget uncertainties and potential tax changes. It's a calculated gamble that property values will hold steady or even rise once interest rates begin their anticipated descent, making those higher LTV loans less risky than they might appear.
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Simon BridglandVerified
Director at Charwin Private Clients
In the run up to the festive season, borrowers will have been trying to squirrel away money to pay for Christmas, so this will be music to the ears of borrowers pressed for equity at the higher end of the loan-to-value scale. HSBC is often seen by industry professionals as the choir master, conducting the mortgage market. But in reality, are they looking to gather more flock to hum to their tune or is it simply to balance the books in the eyes of the regulator? Lenders need to keep default risk on an even keel, so they could have room to move in the riskier higher loan to value business. With borrowers with smaller deposits hoping for improvements to rates, this could mean a slightly merrier Christmas.
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Rohit KohliVerified
Director at The Mortgage Stop
It’s positive news that prospective borrowers with smaller deposits could benefit from slightly lower rates, as one of the country’s biggest lenders, HSBC, reduces rates for higher LTV mortgages. This suggests confidence in the property market and aims to make borrowing more accessible to first-time buyers and those with less equity. On the other hand, those with lower LTV ratios will see their borrowing costs increase, though this may simply be HSBC adjusting its business levels rather than indicating a broader market trend. Balancing risk and demand is likely behind these varied adjustments.
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Elliott CulleyVerified
Director at Switch Mortgage Finance
Mortgage lenders were far more aggressive cutting interest rates at lower LTVs, which has meant that, with recent rises in SWAPs, they have had to backtrack and put rates up. Higher LTVs were not given as much love so there is some wiggle room for some lenders to still make improvements that is more likely to benefit first time buyers.
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Hannah BashfordVerified
Director at Model Financial Solutions
HSBC seems to be cherry-picking the clients they want more business from. By changing rates in this way they will attract borrowers with smaller deposits but make their product offering less attractive for people with bigger deposits or more equity. This will be welcomed by those with more risk due to the smaller amount of money they have in their home and will help with those monthly budgets. However, it remains to be seen who will sweep up the less risky clients who have more of their own money in their property.