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More and more lenders are set to increase rates on mortgages, brokers have warned, as the fallout from the Bank of England’s rate rise continues to devastate homeowners.
The fresh blow to the housing sector comes as HSBC pushed mortgage rates up for the second time in one week in an unprecedented move for the high street bank.
HSBC said yesterday it was removing deals it introduced just on Monday following news that the central bank would keep interest rates high to cool inflation. It comes after the bank already pulled deals for repricing last Thursday after UK gilts surged.
Brokers have warned other lenders are likely to follow the move, with interest rates now expected to reach 5.75 per cent by the end of the year.
“I would say others will react in a similar fashion simply because they will tend to borrow money from the same kind of places,” Justin Moy, managing director at EHF mortgages, told City A.M.
“Whatever pressures are on HSBC will be similar to other high street lenders… also no lender really wants to be the number one lender… it is not a monocle that many actually want to have,” he said.
“No one wants to be left holding the baby because if someone has got some cheaper mortgage products, then as brokers we would naturally gravitate towards them.”
Moy also said that the volatile market has placed pressure on people to make decisions on their mortgages quickly.
“It worries me that, if nothing else, we as advisors and clients are becoming the situation where you’re having to make quick snap decisions, which might be right, but also maybe be wrong [for homeowners].”
The move will hit prospective buyers and homeowners looking to reinstate their payment plans the most.
New analysis by the Centre for Economics and Business Research (CEBR) showed that London homeowners looking to renegotiate their mortgage this year face a whopping £7,300 rise in annual costs in the wake of high inflation.
Chris Sykes, technical director at Private Finance, said: “I quoted a single first time buyer £1,900 monthly payments last week and then this week it would be £2,150, it is so hard to make a property buying decision with the instability of a market and not knowing what your payment would be until after an offer is accepted, especially if an offer takes a while to be accepted.”
“It would be great if lenders would allow you to pay, pre-finding a property, a booking fee in order to secure a rate and buy yourself that security.”