Lenders have repeatedly re-priced and pulled home loan offerings in recent weeks in a scramble to keep up with soaring funding costs, spurred by expectations for more interest rate hikes from the Bank of England as it battles stubbornly high inflation.
"We're firmly focused on supporting customers through current pressures and providing access to good deals. However, over recent days cost of funds has increased and, like other banks, we have had to reflect that in our mortgage rates," HSBC said in a statement. "It takes a far lower mortgage rate to create the same amount of financial stress in terms of repayments as a double-digit mortgage rate did back in previous periods," Hudson said.The question now is how mortgage market stress will feed through into the real economy.
"This is not the news the hundreds of thousands of homeowners will want to hear and will send shivers down their spine," he said. Borrowers therefore should expect volatility in mortgage prices until swap rates start to fall, those bankers say, and there can be no certainty in when that might begin until policymakers achieve greater control over inflation.