HSBC is increasing its mortgage rates for the second time in just one week from tomorrow, Monday, July 27. The lender is raising a number of rates across its residential and buy-to-let mortgages, in a move that mortgage brokers say is likely to be followed by other banks.
Second Rate Hike in Seven Days
The latest repricing comes as swap rates, which lenders use to price fixed-rate mortgages, have risen sharply. This follows a spike in the oil price above $100 a barrel for the first time since May, after the conflict between Iran and the US escalated. Although oil dipped just below that threshold on Sunday, July 26, market fears persist that higher energy costs will feed into inflation, making it harder for the Bank of England to consider cutting interest rates.
HSBC’s move affects both residential and buy-to-let products, adding pressure on borrowers already facing higher costs. The lender had already increased rates earlier in the week, making this the second adjustment in seven days.
Drivers Behind the Increase
Mortgage brokers point to the volatility in swap rates as the primary driver. Swaps are sensitive to expectations of future interest rates, which are influenced by inflation outlook and geopolitical events. The escalation in the Middle East has injected uncertainty into energy markets, pushing up oil prices and, in turn, swap rates.
Matt Coulson, founder at Rickmansworth-based Heron Financial Ltd, said: "We're back in the volatile space we saw earlier this year, with tension in the Middle East and the oil price feeding straight into swap rates, and borrowers feeling it almost immediately. Lenders price off swaps rather than Bank Rate, so when those jump, repricing follows within days."
He added: "What makes this one sting is how quickly it follows HSBC's last increase. In a market moving this fast, there is real value in a rate you can secure at no cost and still walk away from, because most offers let you switch to something better before completion. That gives you a floor while you keep watching, rather than being caught out by the next move. This is exactly where a good broker earns their keep: staying on top of it daily, keeping clients informed, and moving quickly when a window opens."
Brokers Warn of Further Moves
HSBC is unlikely to be the last lender to adjust rates, according to mortgage experts. The rise in swap rates is expected to force more banks to increase fixed-rate mortgage pricing over the coming days. The market is watching closely for further moves, particularly if oil prices remain elevated or geopolitical tensions worsen.
Martin Rayner, financial adviser at Compton Financial Services, said: "HSBC's latest rate increase is not a surprise. They have been one of the last major lenders to move, so this was largely expected after recent increases elsewhere. The wholesale mortgage market appears to have overreacted once again to geopolitical tensions in Iran, much like we saw earlier this year. This time, however, markets are also having to price in additional uncertainty around the Government's fiscal direction following a series of early policy announcements."
Rayner added: "My expectation is we will now see a period of relative stability unless the situation in the Middle East escalates further or the Government makes further significant economic announcements. Unfortunately, mortgage rates tend to rise like a rocket and fall like a feather, so even if funding costs improve, I expect any reductions to be gradual rather than rapid."
Impact on Borrowers
For homeowners and prospective buyers, the repeated rate increases mean higher monthly payments. Those with mortgages due for renewal or looking to secure a new deal face a more expensive market. Brokers advise acting quickly to lock in rates where possible, while also keeping an eye on potential improvements if volatility subsides.
The broader economic context, including inflation and monetary policy, will continue to influence mortgage pricing. Borrowers are urged to seek professional advice to navigate the rapidly changing landscape.
