HSBC has temporarily withdrawn mortgage deals for new borrowers as the turbulence that has engulfed the UK mortgage market over the past few weeks continued.
The bank removed products for new residential and buy-to-let products on Thursday, with new more expensive deals becoming available on Monday.
HSBC had originally set a deadline of 5pm on Thursday for new applications, but closed applications early after a surge in demand. The bank said that it was withdrawing new deals “to ensure that we can stay within our operational capacity and meet our customer service commitments”.
Speaking on BBC Radio 4, former deputy director of the International Monetary Fund (IMF) Mohamed El-Erian said “People expect that the cost of mortgages will go up and you will accelerate your demand for getting that mortgage. Why pay more tomorrow when you can pay less today?
“If you’re HSBC, you see lots of people turn up wanting mortgages and you worry about two things. One is: will I make money on those mortgages? Two is: can I operationally handle these?” he continued.
A number of bank have also hiked rates on a range of products amid the turbulence. Nationwide increased rates on fixed-rate deals by as much as 0.25 percentage points while reducing rates on rates on trackers.
A Nationwide spokesperson said: “In recent weeks swap rates (which underpin the pricing of fixed-rate mortgages) have continued to rise and lenders across the market have increased rates or withdrawn products.”
According to Moneyfacts, the average rate on a two-year fixed mortgage has shot up to 5.83 per cent from 5.26 per cent at the beginning of May.
Mortgage rates started rising dramatically after the most recent inflation reading proved unexpectedly high, raising the likelihood of the Bank of England hiking rates further than anticipated.
Markets now expect rates to peak at 5.5 per cent, up from 4.5 per cent at the moment.
Also today, a report from ratings agency Moody’s suggested that house prices across the country could fall by as much as 10 per cent over the next two years.
“The combination of less affordable mortgages and high inflation putting a dent in incomes will trigger a correction in the UK housing market,” it said.