HSBC latest lender to hike rates "possibly in anticipation of the upcoming Doom Budget"
BROKERS have urged borrowers not to delay locking into a fixed rate deal, as HSBC is the latest major lender to announce a wide range of increases to its residential mortgage rates from tomorrow. They said lenders are reacting to higher gilt yields and stubborn inflation, but are also increasingly jittery about the forthcoming Budget. One warned: "Every day you wait could cost you."
Adam Stiles, Managing Director at London-based Helix Financial Partners, said November 26th is already casting a long shadow over the mortgage market: “HSBC have followed a long line of other lenders who have increased rates over the past week or so. This could be possibly in anticipation of the upcoming Doom Budget, as well as a number of other economic factors. We expect to see other lenders continue to raise their rates for the time being in what is a fraught political and economic climate.”
Pete Mugleston, Managing Director at Derby-based onlinemortgageadvisor.co.uk, said the bond market is not impressed: “Even though the Bank of England has been cutting rates, the bond market is telling a different story. Rising gilt yields are pushing up the cost of funding fixed mortgages, which could be why lenders like HSBC are repricing. Until yields settle, borrowers should expect more of this through September.”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, agreed: “We're starting to see a domino effect now among UK lenders, with rate increases being announced by the day. Political chaos and the markets proving increasingly sceptical of the Government's ability to manage the public finances are not helping. More rate rises look baked in during September.”
Aaron Strutt, Product and Communications Director at London-based Trinity Financial, said borrowers should not delay: “More of the bigger lenders are raising their rates and even though they are not going up by huge amounts, they are enough to noticeably bump up monthly repayments. There will almost certainly be more increases this week, so if you are holding off locking into a fixed deal, then this probably isn't the time to do so.”
Louis Mason, Communications Director at London-based Oportfolio Mortgages, said: "Unfortunately, this trend of rates increasing is likely to continue throughout September. Why? Because the money markets are betting the Bank of England will have to raise rates and keep them higher for longer to tackle stubborn inflation. Lenders are simply passing on that higher cost of funding.
"My blunt advice? Don't wait. Act now. If your current deal ends in the next 6 months, your number one job is to secure a new rate today. You can always switch to a cheaper deal later if rates miraculously fall, but you can't get back a cheap rate that's gone.
"This isn't about timing the market, it's about protecting yourself from it. Lock in a rate you can afford to get that certainty. Speak to a broker now. Every day you wait could cost you."
