Realtors have warned that more and more lenders are planning to raise interest rates on mortgages, as the fallout from the Bank of England’s high interest rates continues to devastate homeowners.
The fresh hit to the housing sector comes as HSBC pushed mortgage rates higher for the second time in one week, an unprecedented move for a high street bank.
HSBC said yesterday it was only canceling deals it introduced on Monday after news that the central bank would keep interest rates high to calm inflation. It comes after the bank had already withdrawn deals to re-quote last Thursday after a surge in UK bonds.
Brokers have warned that other lenders are likely to follow suit, with interest rates now expected to reach 5.75 percent by the end of the year.
Justin Moye, managing director at EHF Mortgage, told City AM
“Whatever pressures HSBC is under will be the same as other major lenders… Also, no lender really wants to be the number one lender… It’s not a unilateral one that many actually want,” he said.
“Nobody wants to be left carrying the baby because if someone has some cheaper mortgage products, then as brokers we will naturally be drawn to them.”
Moi also said that the volatile market has put pressure on people to make quick decisions about their mortgages.
“It worries me that, if nothing else, we as consultants and clients have become a situation where you have to make quick, snap decisions, which may be right, but may also be wrong (for homeowners).”
The move will affect potential buyers and homeowners looking to return their payment plans the most.
New analysis by the Center for Economics and Business Research (CEBR) shows that London homeowners looking to renegotiate their mortgage this year face a massive £7,300 rise in annual costs in the wake of soaring inflation.
Chris Sykes, technical director at Private Finance, said: “I quoted a first-time buyer with £1,900 monthly payments last week, then this week it will be £2,150. Accept the offer, especially if it takes some time to accept the offer.
“It would be great if lenders could allow you to pay, pre-find a property, and hold fees in order to lock in a price and buy that security for yourself.”