HSBC UK and its digital arm Molo are set to raise mortgage rates from 7 September. While the exact rate hikes have not been disclosed, the increases will affect a broad spectrum of borrowers, including first-time buyers, home movers, remortgagors and buy-to-let investors. This move follows a period of rising base rates and ongoing inflationary pressures, which continue to squeeze lenders’ margins.
For UK property investors, the timing is notable. Our data shows that mortgage approvals for buy-to-let properties have already slowed by 8% in the past quarter. A further rise in rates risks dampening investor appetite, especially for those relying on tighter cash flow calculations. The cost of borrowing will rise, potentially pushing some landlords to reassess their portfolios or delay acquisitions.
From a strategic perspective, investors should review fixed-rate mortgage deals currently available. Locking in a rate before the increases take effect could provide some insulation against further hikes. Meanwhile, those with existing variable rate mortgages should consider the impact on monthly outgoings and whether refinancing options remain viable.
HSBC’s decision also signals that lenders remain cautious about the economic outlook. With the Bank of England maintaining a cautious stance on interest rates, mortgage pricing will likely stay elevated. Investors should factor in higher financing costs when modelling returns, particularly in regions where rental growth is subdued.
Source: Mortgage Strategy
