HSBC increases rates on cheapest mortgages - but cuts them on other deals

  • Major lender is both increasing and decreasing rates, as of tomorrow

By ED MAGNUS, SENIOR THIS IS MONEY REPORTER

Updated:

HSBC has said it will be increasing some of its cheapest mortgage rates - though more expensive deals will be cut. 

From tomorrow, the bank will hike rates across its lowest-priced products - those reserved for buyers with the biggest deposits or homeowners remortgaging with large amounts of equity. 

Although HSBC won't reveal the changes until tomorrow,  it is likely that its 3.82 per cent five-year fix will rise - this is for those buying with at least a 40 per cent deposit. 

HSBC is the latest lender to increase mortgage rates, but is also lowering some of its deals

HSBC is the latest lender to increase mortgage rates, but is also lowering some of its deals

Its 3.83 per cent rate for those remortgaging with at least 40 per cent equity is also likely to be increased. 

> How to remortgage your home: Your guide to finding the best deal

However, HSBC is also lowering rates across some of its products aimed towards those buying with smaller deposits or remortgaging with less equity.

This should benefit homebuyers with a deposit of 20 per cent or less or homeowners with 20 per cent equity or less.

Last week Halifax and Barclays upped home loan prices following similar moves by NatWest, Santander and TSB earlier in the week.

Mortgage brokers and market commentators believe HSBC's willingness to lower rates for those with smaller deposits signals the bank is confident that house prices will continue to rise.

Ben Perks, managing director at Orchard Financial Advisers in Stourbridge, told the news agency Newspage: 'As most lenders make rate increases across the board, HSBC are decreasing rates for anyone borrowing more than 80 per cent of their property value. 

'First-time buyers are some of the most active at the moment, so they want to secure these customers. It'll benefit plenty of borrowers.'

Rohit Kohil, 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.'

How to find a new mortgage

Mortgage rates have soared after conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts.

If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible.  

This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.

Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.

Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you.

This is Money's mortgage tips 

What if I need to remortgage? 

Borrowers should compare rates, speak to a mortgage broker and be prepared to act. Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it.

Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying arrangement fees. If you do this and don't clear the fee on completion, interest will be paid on it over the term of the loan.

What if I am buying a home? 

Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power.

What about buy-to-let landlords?

Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages. This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too. 

> Find your next mortgage deal with This is Money and L&C

Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage 

Most watched Money videos