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HSBC UK's Attempt to Ease Rising Mortgage Rates Amid Economic Challenges

As the mortgage landscape becomes increasingly taxing for UK customers, HSBC's UK Chief aims to buffer the financial impact of the continual rate hike.

Ian Stuart
Ian Stuart

The CEO of HSBC UK, Ian Stuart, in a recent interview with Sky News, expressed his concerns about the burdensome reality for mortgage customers due to the relentless rise in mortgage rates. With no immediate relief in sight, Stuart pledged that the bank is actively working towards softening this financial blow for its customers.

The Financial Shocker on the Horizon

Stuart revealed that 300,000 customers on fixed-rate deals are due to face a jarring financial transition in the existing market environment. A switch from a mortgage rate of around 1.5% to approximately 5% awaits customers who secured their mortgages around two to five years ago, indicating a steep rise in expenses.

Economic Climate Fuels Rate Increase

The successive hikes in the Bank rate by the Bank of England, expected to persist into the coming week, are principally driving these escalating mortgage costs. Upcoming employment data, predicted to further amplify wage growth, is only likely to increase the pressure on the Bank to persist with rate increases, intensifying inflation concerns.

The Costly Cure to Economic Maladies

While raising the Bank rate is a strategic move to temper demand and price pressure within the economy, it simultaneously increases household costs via mortgages. For instance, this policy directly impacts deals that track the Bank rate and new fixed-rate offers.

A Snapshot of the Rising Mortgage Rates

Data from revealed an average two-year fixed rate standing at 5.86% rate while the five-year figure was pegged at 5.51%. These mortgage costs have been further inflamed by the financial market's response to the Truss government's mini-budget announced last September.

The High Stakes for Homeowners and Banks

HSBC anticipates an increasing default rate due to the rising cost of mortgages and their ripple effect on living costs. Stuart stressed the Bank's focus on existing customers, even as it endeavors to maintain a market presence with responsible rates.

Ensuring Operational Sustainability Amid High Demand

HSBC UK recently disclosed plans to bolster mortgage borrowing capacity after a temporary pullback of products from brokers due to surging demand. Stuart assured that all products and rates for existing customers remain unaffected.

Gearing Up for the Future

As the Bank reintroduces the UK wing of Silicon Valley Bank, Stuart expressed optimism for the future. He affirmed HSBC's commitment to the tech business sector and assured customers of the Bank's intent to uphold the identity and culture of the newly acquired entity.