HSBC reportedly set to increase mortgage rates following similar moves by TSB, Santander and Coventry

High street bank HSBC is set to increase its mortgage rates from tomorrow (February 23) in another blow for homebuyers. It is understood that both new and existing residential customers across all primary loan-to-value and fixed-term categories will be affected. However, the bank has not confirmed by how much the rates will increase. The market's only mortgage rate below 4%, offered by HSBC, has also been withdrawn by the bank.

HSCB's decision follows similar moves made by other banks including Santander, TSB and Coventry. It is believed that the increases have been driven by both an up tick in swap rates, which determine the cost for mortgage lenders to provide loans to homebuyers, as well as a feeling within the industry that markets had got carried away with a fall the base rate earlier this year.

Those in the industry have called the expected increase a "hammer blow" for for market. Ashley Thomas, director at Magni Finance said: "HSBC hiking rates is yet another hammer blow to Britain's beleaguered property market. 2024 started on a high but those days now feel like a distant memory as more lenders reprice upwards."

David Hollingworth, associate director at L&C Mortgages, added: "This could feel like a retrograde step for borrowers but it is a far cry from the very rapid and steep increases that we saw post mini-budget and again last summer. Market rates aren't skyrocketing in the same way that would force a sharp and significant rise in borrowing costs but it is enough that lenders are having to adjust in the face of higher funding costs. I expect there will still be plenty of jockeying for position as the market remains extremely competitive but in the short term we may still see more movement in mortgage rates."

It comes after the bank reported record pre-tax profits of $30.3bn in 2023, up from $17.1bn in the previous year. CEO Noel Quinn said in a statement: "Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008."