October 22, 2024 12:07 pm

Insert Lead Generation
Nikka Sulton

HSBC has announced that it will raise rates on some of its cheapest mortgage products, while at the same time cutting rates on more expensive deals. This decision is expected to affect buyers with large deposits or homeowners with significant equity looking to remortgage. The bank’s decision comes as part of broader changes in the mortgage market, which continues to experience fluctuations in interest rates. These shifts impact the affordability and accessibility of mortgages for different types of borrowers.

The changes will take effect tomorrow, with the bank set to increase rates across its lowest-priced products. These deals are typically reserved for those with the strongest financial position, such as buyers with a substantial deposit or homeowners looking to remortgage with a large amount of equity. Although HSBC has yet to reveal the full details, the increase is expected to affect some of its most competitive offerings, making them less affordable for borrowers in this category.

One of the products likely to be impacted is the five-year fixed-rate mortgage, currently offered at 3.82% for those purchasing a property with at least a 40% deposit. This particular deal has been one of the more attractive options for buyers with significant financial backing, and any rate rise could make it less appealing. Buyers and remortgagers who have been planning to take advantage of this low rate may face higher costs as a result of the anticipated increase.

These adjustments reflect ongoing movements in the mortgage sector, as banks continue to respond to changing economic conditions and market demands. While some buyers may find their options more limited, others may benefit from the reductions in rates on more expensive deals. As the details emerge, homeowners and prospective buyers will need to reassess their financial plans to determine how these changes might affect them.

HSBC is set to increase its 3.83% mortgage rate for homeowners who are remortgaging with at least 40% equity. This change is part of a broader adjustment across its mortgage offerings, particularly affecting those with larger deposits or substantial equity. While the exact new rates are yet to be revealed, these changes could impact homeowners who have been benefiting from some of HSBC’s lowest mortgage rates.

However, in contrast to the increases for those with higher equity, HSBC is also planning to lower rates on a number of its products aimed at buyers with smaller deposits. These reductions will likely benefit homebuyers who are working with a deposit of 20% or less. For those with less equity, securing a mortgage or remortgage has often been more challenging, but these rate cuts could provide a more affordable solution.

Homeowners with smaller deposits or lower levels of equity could see significant savings, particularly in an environment where rising interest rates have put pressure on affordability. HSBC’s decision to lower rates for this segment of the market reflects an effort to provide more competitive mortgage options for a wider range of buyers. This move could also help those looking to remortgage but who may not have built up as much equity in their current home.

These changes highlight HSBC’s efforts to balance its mortgage offerings. While those with larger deposits or more equity might see their rates rise, buyers and homeowners with smaller deposits or less equity could benefit from more favourable terms. These adjustments are part of the ongoing shifts in the mortgage market as lenders respond to broader economic conditions.

Ben Perks, the managing director at Orchard Financial Advisers in Stourbridge, shared insights with Newspage on HSBC’s recent mortgage strategy. He highlighted that while many lenders are increasing their rates across the board, HSBC is taking a different approach by lowering rates for those borrowing more than 80% of their property’s value. This move is seen as a significant shift in a market where rate hikes have become the norm, especially for those with smaller deposits or less equity in their homes.

Perks emphasised that this decision by HSBC is particularly aimed at attracting first-time buyers, who remain some of the most active participants in the housing market. First-time buyers often face challenges when saving for large deposits, and HSBC’s more favourable rates for those borrowing at higher loan-to-value (LTV) ratios will help alleviate some of these pressures. The reduction in rates for higher LTV mortgages is expected to appeal to a wide range of buyers who are eager to step onto the property ladder.

The focus on borrowers with smaller deposits could provide significant opportunities for many individuals who have been struggling to secure competitive mortgage deals. Perks pointed out that the bank’s strategy would not only draw in first-time buyers but also benefit homeowners looking to remortgage with less equity. In a market where many lenders are hiking rates, HSBC’s move offers a rare chance for borrowers in these categories to lock in more affordable rates.

This shift is expected to have a positive impact on many prospective buyers and homeowners, especially those who are finding it difficult to navigate the current market conditions. With HSBC’s lower rates, buyers with smaller deposits will have more options, potentially easing some of the financial strain that has come with rising mortgage costs.

Rohit Kohil, director at The Mortgage Stop, commented that HSBC’s decision reflects a sense of confidence in the property market. By making borrowing more accessible for first-time buyers and those with less equity, the bank is likely aiming to attract a wider pool of potential customers. This move could help more people enter the property market, especially those who have been facing challenges due to higher deposit requirements.

However, Kohil also noted that those with lower loan-to-value (LTV) ratios might see their borrowing costs rise. This increase could be seen as part of HSBC’s strategy to adjust its business levels, rather than indicating a shift in broader market trends. While many lenders have been raising rates across the board, HSBC seems to be tailoring its approach based on different customer segments.

Kohil explained that the decision to raise rates for those with lower LTV ratios could be part of HSBC’s efforts to balance risk and demand. By lowering rates for higher LTV borrowers and increasing them for those with more equity, the bank is likely managing its risk exposure while trying to meet the demands of various market sectors. This strategy could help HSBC maintain a competitive edge while still protecting its financial interests.

HSBC’s varied rate adjustments appear to be a calculated response to current market conditions. By focusing on first-time buyers and those with less equity, the bank is likely aiming to boost its customer base while managing risk among borrowers with larger deposits.

 

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
>