Analyze and contrast mortgage options: 26 March: Market Reacts to Bank Rate Hold

Starting tomorrow (27 March), HSBC will be modifying specific fixed rate offers for both new borrowers and existing customers. The loan-to-value ratios for its deals will be decreased, while the interest rates for deals with lower loan-to-value ratios are expected to increase. Other lenders, such as Barclays, The Mortgage Works (a division of Nationwide building society), and Bank of Ireland, have also reduced certain interest rates. HSBC has announced that it will reduce the interest rates on specific two, three, and five-year fixed-rate mortgages for house purchases with loan-to-value ratios (LTV) ranging from 90% to 95%.

Deals with loan-to-value (LTV) ratios of 85% and less will experience an increase. The bank’s fixed rates for purchase with a fee saver option for two and three years will also increase at a loan-to-value ratio of 90%. Specific fixed rates for remortgages, ranging from 60% LTV to 90% LTV, will experience an upward trend. Existing customers who are reaching the end of their current contract and are seeking a new fixed rate will experience an increase in prices for deals with higher loan-to-value (LTV) ratios, while deals with LTV ratios of 90% and 95% will see a decrease in prices. Existing clients will experience an increase in buy-to-let (BTL) rates, while new BTL borrowers looking to purchase or refinance will see a fall in deals.

Tomorrow morning, the bank will announce its latest interest rates and financial offers, which will be accessible both directly and through intermediaries. Several brokers have been astonished by HSBC’s rate risks, considering the increasing market perception that the Bank of England may reduce interest rates in the next summer. Nick Mendes, a broker at John Charcol, commented that HSBC’s decision not to drop mortgage rates for its most competitively priced offers at lower loan-to-value ratios is an intriguing choice.

HSBC evidently believes that reducing rates at this time would not be a wise decision. It could also be a strategic choice to manage its existing pipeline of applications. Starting tomorrow (27 March), Barclays will be reducing interest rates on specific residential purchase and remortgage agreements by a maximum of 0.25 percentage points. The bank is decreasing the interest rate on its two-year fixed rate remortgage program at 75% LTV with a £999 charge from 4.9% to 4.7%.

The Mortgage Works, the buy-to-let lending division of Nationwide, has significantly reduced certain fixed interest rates by up to 0.4 percentage points. The mutual is providing a five-year fixed interest rate of 3.99% for both purchase and remortgage, with a 3% fee, applicable to borrowers with a loan-to-value ratio of 55%. Additionally, a two-year fixed interest rate of 4.99% is available for limited company borrowers, also for purchase and remortgage, with a 3% fee and a loan-to-value ratio of 75%.