Yahoo Finance HSBC pulls most of its new mortgage deals after flood of demand
HSBC has pulled all of its mortgages available through brokers after being overwhelmed by a rush of customers seeking to lock-in deals before rates rise.
The bank on Thursday withdrew all residential, buy-to-let and business mortgage deals in order to stay “within our operational capacity”. HSBC, which accounts for almost a quarter of the home loans market, said it would relaunch its products on Monday.
It is the first time the bank has withdrawn from the mortgage market since the aftermath of September’s mini-Budget, when turmoil in the government debt market roiled lenders.
Yields on government debt have once again been rising sharply in recent weeks after shock inflation data prompted investors to raise their forecast for the peak of interest rates.
The market movements have prompted mortgage lenders to rapidly reprice their deals and withdraw some products altogether. Meanwhile, homeowners and prospective buyers have rushed to snap up deals before they disappear or become more expensive.
HSBC’s existing customers who need to refinance can still get loans for remortgage, but the lender has increased rates on all 36 of the deals on offer.
A flurry of major lenders including Nationwide and Lloyds also made big increases in their mortgage rates on Thursday.
Halifax raised its fixed rate deals by up to 0.82 percentage points, increasing the cost of a typical £200,000 loan by £1,640 per year.
A day of changes meant the average rate on a two-year fix stood at 5.82pc by Thursday evening, up from 5.33pc in just 16 days.
Aaron Strutt, of Trinity Financial mortgage brokers, said: “I thought the rate changes were going to slow down this week but they have been pretty intense. It seems likely there will be more to come.”
Capital Economics now expects mortgage rates to exceed the highs recorded last Autumn in the aftermath of Liz Truss’ mini-Budget.
A massive mortgage rate shock looms as 700,000 homeowners face a jump of at least 50pc in their monthly payments between now and February, its analysts warned.
Homeowners coming to the end of two-year fixed rate deals, who secured deals while interest rates were at record lows during the pandemic, face the most extreme increases in their bills when they refinance.
A buyer who took out a £180,000 loan in June 2021 with a 25pc deposit will see their monthly mortgage bill jump from £700 to £1,080 if they refinance with rates at 5.5pc to 6pc.
The Bank rate currently stands at 4.5pc but economists now expected it to peak at 5.5pc.
Andrew Wishart, who runs Capital Economics’ housing service, warned that more homeowners could fall into arrears.
Mr Wishart said: “There is a growing risk that the pressure on household budgets from inflation and the large increase in payments for those coming to the end of a two-year fix will cause financial distress to occur earlier than in the past.”
Ratings agency Moody’s said the recent spike in mortgage rates and persistently high inflation would prompt house prices to fall by 10pc over the next two years.
The correction would be larger than in many similar countries as more people have variable or short-term fixed mortgages in Britain than other comparable nations.
Higher rates will knock 5pc of mortgage holders’ disposable income if rates remain around the current level, Moody’s said.
Amid the dour outlook for household finances, MPs renewed their criticism of Britain’s major lenders for failing to pass on the benefits of high interest rates to savers.
The Treasury Select Committee found that US lenders had passed on far more of the benefit of rising interest rates to their customers compared with UK banks.
Harriett Baldwin, Conservative chair of the cross-party group of MPs, said: “It’s clearer than ever that the nation’s biggest banks need to up their game and encourage saving.”
An HSBC spokesman said: “To ensure that we can stay within our operational capacity and meet our customer service commitments, we occasionally need to limit the amount of new business we can take each day. Our broker products will be available again Monday, June 12.”
