HSBC customers face costly change ‘from Friday’ | Personal Finance | Finance

HSBC and Coventry Building Society have today announced they are increasing residential and buy-to-let fixed mortgage rates from Friday and Monday respectively, as swap rates continue to rise on the back of inflationary concerns due to events in the Middle East. While swaps, which determine the pricing of fixed-rate mortgages, settled slightly on Wednesday, Thursday saw them head north again, with the two-year swap up 6.4 basis points (bps) to 3.55% and the 5-year swap up 6.6 bps to 3.69%.

Brokers warned rate hikes “were always on the cards” after this week’s increase in wholesale money market costs and that HSBC and Coventry are unlikely to be the only lenders “running for the hills”. Omer Mehmet, managing director at Welling-based Trinity Finance, said the events of the past five days highlight how quickly markets can turn and urged people to lock into rates while they can.

He said: “Ongoing events in the Middle East have pushed up swap rates this week and are now starting to feed through into mortgage pricing. Just a week ago, for example, it seemed like a Bank of England rate cut this month was inevitable and now some are predicting there will be no cuts in 2026. Anyone considering a mortgage at present should lock into a rate as soon as possible.”

Though he hopes the current volatility in swap rates is temporary, Adam Stiles, managing director at London-based Helix Financial Partners, believes other lenders could soon follow suit.

He said: “The stark reality of recent global events has hit markets with great uncertainty, which has translated to huge volatility in swap rates. Coventry and HSBC won’t be the first lenders running for the hills and increasing rates.”

But other brokers point out that lenders are more resilient nowadays than they have been in the past.

According to Nouran Moustafa, practice principal and IFA at London-based Roxton Wealth: “Geopolitical tensions have pushed gilt yields and swap rates higher, and that inevitably feeds into mortgage pricing. That said, lenders have spent the past few years dealing with volatility and are far more cautious about overreacting.

“I would expect the immediate response across the market to be a pause in rate cuts and some selective repricing rather than aggressive increases. The key question is whether market movements prove temporary or sustained.

“Mortgage rates are driven by funding costs over time, not single events. If volatility settles, lenders will likely prioritise stability. If higher funding costs persist, we will see gradual repricing across the market but nothing like the disorderly shifts seen in 2022.”

Darryl Dhoffer, founder at Bedford-based The Mortgage Geezer, agreed: “When geopolitical tension such as that being caused by events in the Middle East spikes, swap rates will also often follow. However, if the situation in the Middle East starts to stabilise, swaps could fall as fast as they rose, turning this hike into a temporary blip rather than a market crash.”

Justin Moy, managing director at Chelmsford-based EHF Mortgages, said the rate rises now emerging were inevitable: “And so it begins. After the quite sizeable swap rate increases earlier in the week, rate hikes were always on the cards and now they’re starting to be announced.

“However, it’s worth noting that swap rates fell a little on Wednesday, suggesting increases may not be as dramatic as initially expected. We will know the exact lie of the land on Monday when Coventry and a few other lenders look to publish their new deals.”

Craig Fish, director at London-based Lodestone Mortgages, said “lenders will be watching each other closely right now”.

He continued: “If swaps hold steady or ease back, many may quietly decide there’s no need to reprice because nobody wants to be the lender who jumped the gun and scared off business unnecessarily. That said, the situation remains fluid.”

Dariusz Karpowicz, director at Doncaster-based Albion Financial Advice, also emphasised how quickly markets — and mortgage pricing — can turn: “For weeks, the direction felt obvious: rates were falling, a Bank of England cut looked nailed on and everyone got comfortable.

“Then geopolitical risk reminded us that comfort is temporary. Coventry and HSBC repricing is likely the first domino, not the last. The real question is whether this is a blip or a shift.”