UK lenders are set to follow HSBC in raising mortgage rates, leading brokers in the UK have warned. This news comes as many UK homeowners are trying to take advantage of low interest rates by refinancing their mortgages.
HSBC recently announced that it would be increasing the cost of its fixed-rate mortgages for new customers by up to 0.25%, citing increasing costs of funding. This move by HSBC marked the first increase in mortgage rates since July 2018.
According to brokers, other lenders in the UK are likely to follow suit in raising their mortgage rates in the coming months. This is because lenders are facing a squeeze on their margins due to increasing competition and low interest rates.
The UK housing market has remained strong despite the challenges posed by COVID-19, with record low mortgage rates spurring the market forward. However, brokers warned that rising mortgage rates could jeopardize this momentum. Many homeowners may not be able to afford higher mortgage payments, and some may be forced to sell their homes if they cannot refinance at a lower rate.
Brokers also caution that those seeking to refinance their existing mortgages should act quickly before lenders raise their rates. Those who delay refinancing could find themselves facing higher interest rates, which could ultimately cost them thousands of pounds over the life of their mortgage.
Despite the warning, some experts suggest that any rise in mortgage rates is unlikely to be significant in the short-term. This is because the Bank of England has indicated that it is not planning to raise interest rates anytime soon.
However, homeowners and prospective buyers should still be aware of the potential for rising mortgage rates and be prepared for any changes in the market. They should be proactive in seeking out the best deals and working with lenders to ensure they are getting the best rates and terms available.
In conclusion, brokers warn that UK lenders are likely to follow HSBC in raising mortgage rates, which could have negative consequences for homeowners and prospective buyers. To avoid higher costs, borrowers should act quickly to refinance at the best rates available, and be prepared for any changes in the market. Ultimately, staying informed and proactive is key to success in the UK housing market.