HSBC and Barclays have both announced the withdrawal of sub-4% mortgages following rate increases across their residential ranges.
Barclays is the second major lender to withdraw sub-4% fixed rate mortgages aimed at purchasers this week, following HSBC’s decision earlier this week.
Barclays is set to increase residential purchase and remortgage rates by up to 0.30%, effective from tomorrow.
The lowest 60% LTV rate for first-time buyers at HSBC is now 4.06% for Premier customers or 4.09% for the standard rate.
The average two-year fixed rate across all LTVs is now 5.01% with the average five-year rate at 5.09%, according to Moneyfacts data.
Hina Bhudia, partner, Knight Frank Finance, said: “This is a real blow to borrowers, who could access deals just above 3.5% only a month ago. There are still a handful of sub-4% fixed rate deals available, but they are likely on borrowed time. The larger banks like HSBC tend to set the tone and other lenders follow. The longer the conflict in the Middle East continues, the more investors will take the view that higher energy costs will feed inflation, putting upwards pressure on mortgage rates.
“Should this continue, tracker products may soon be cheaper than two-year fixed products, which will be appealing for some, but each borrower will have to take a view on the risk that interest rates move against them.”
