Bank of England reduced the rates, but HSBC increased the mortgage rate, why?

houmie

Is it because banks need a few days to adjust after the Bank of England changes rates before deciding on their offers?  

At the end of January, HSBC offered me a 2-year fixed rate at 4.20%. By February 5th, the same deal had increased to 4.25%. Today, after the BoE reduced rates by 0.25%, HSBC raised the deal to 4.30%.  

I don’t understand this trend. Should I wait a few days, or is there no point in delaying? I’m unable to remortgage with other banks due to my financial situation.  

Thanks for your advice.

RelievedSheff

The banks do not base their mortgage rates on the BOE base rate. 

Sarahspangles

This cut in the BoE base rate was expected, but over the two year period of your fix the economic outlook has potentially worsened. For example US tariffs currently in the news have increased the likelihood of recession. Or at least, those investing in the market think it’s now more likely.

Fishyfish111

I am in same boat as you with HSBC.
I pre-fixed in early January at 4.44% 2y fixed no fees and it has since risen to 4.54%.
I will stick with the pre-fix unless the come down before my renewal date of 1st July.

houmie

Fishyfish111 said:

I am in same boat as you with HSBC.
I pre-fixed in early January at 4.44% 2y fixed no fees and it has since risen to 4.54%.
I will stick with the pre-fix unless the come down before my renewal date of 1st July.

How did you work out a pre-fix deal with them? I didn't see it online.  Did you have to call them?

Fishyfish111

houmie said:

Fishyfish111 said:

I am in same boat as you with HSBC.
I pre-fixed in early January at 4.44% 2y fixed no fees and it has since risen to 4.54%.
I will stick with the pre-fix unless the come down before my renewal date of 1st July.

How did you work out a pre-fix deal with them? I didn't see it online.  Did you have to call them?

You can do it online and cancel and refine anytime up to around 14-21days prior to your old fix ending. I had to do it through the Internet and not the app.

Fishyfish111

You have to be in your last 180 days of previous fix also.

amnblog

I can think of 5 major Lenders who increased their fixed rates in the past two weeks.

As stated above, Lender's fixed rates (which are the majority of the market) are not directly linked to the Bank of England base rate.

They are mainly influenced by the rates at which Banks lend to each other. Also by the 'appetite' each lender has for lending at the time.

Keeping an eye on the Sterling Overnight Index Average or 'SONIA' rate is a clearer indication of what will happen to most mortgage rates. The last significant movement in SONIA rate was around three months ago. It is likely that some lenders are expecting an upward movement in SONIA and hedging their rates up as a result.

These BOE base rate announcements have falsely become a touchstone for mortgage borrowers to make decisions on securing rates. In most lending cases, a borrower can book a rate a few months  ahead of when it will be needed. They can secure a rate now and swop to lower rates if they become available during the lead in. Securing a rate early protects the borrower against rate rises.

houmie

amnblog said:

I can think of 5 major Lenders who increased their fixed rates in the past two weeks.

As stated above, Lender's fixed rates (which are the majority of the market) are not directly linked to the Bank of England base rate.

They are mainly influenced by the rates at which Banks lend to each other. Also by the 'appetite' each lender has for lending at the time.

Keeping an eye on the Sterling Overnight Index Average or 'SONIA' rate is a clearer indication of what will happen to most mortgage rates. The last significant movement in SONIA rate was around three months ago. It is likely that some lenders are expecting an upward movement in SONIA and hedging their rates up as a result.

These BOE base rate announcements have falsely become a touchstone for mortgage borrowers to make decisions on securing rates. In most lending cases, a borrower can book a rate a few months  ahead of when it will be needed. They can secure a rate now and swop to lower rates if they become available during the lead in. Securing a rate early protects the borrower against rate rises.

Yes, that was a mistake—I was previously on a tracker and assumed the base rate would impact fixed rates too. Do you think it’s worth waiting a few more days, or should I just bite the bullet and take the 2-year fixed rate? My tracker rate ended on January 31st, so I’m now on the standard rate of 6.99%.

amnblog

Your previous delay has cost 0.2% over two years on the currently available rate

Being on the SVR is costing 0.22% a month

houmie

amnblog said:

Your previous delay has cost 0.2% over two years on the currently available rate

Being on the SVR is costing 0.22% a month

Ouch. That’s painful. I was on a 5.04% tracker until January 31st. How did you calculate the 0.22% per month? I’ll likely go for the 2-year fixed at 4.54% with no fees. I have £234,367 left to pay over 15 years, and adding £999 fees would make it more expensive in the long run based on my calculations.  It’s the end of the day anyway. I’ll make the switch tomorrow and pray the rates drops a bit. 

Thank you!