HSBC ignores Bank of England to raise mortgage rates by 0.5pc

HSBC hit homebuyers with a 0.5 percentage point increase in mortgage rates on Thursday – double the size of the Bank of England’s interest rate rise.

The high street bank raised its rates by as much as half a point shortly before the Bank increased the benchmark cost of borrowing by a quarter-point to 1.25pc, the highest level since the financial crisis.

All of HSBC’s fixed-rate deals rose by 0.45 or 0.5 percentage points, the third time in 10 days the bank has altered its rates.

It pressed ahead with the chunky increase, its largest in at least a year, despite a consensus – supported by HSBC’s own economics team – that the Bank would only raise rates 0.25 percentage points.

The daily shift was also roughly double its competitors’ increases on the same day.

An HSBC spokesman said the increase “was not in anticipation of the Bank of England Base Rate decision.”

“We regularly review our mortgage rates, and there are a number of different factors taken into account,” they said.

“There continues to be volatility in funding rate costs, which has led to an upward trend in rates, and on this occasion following our review, some of our rates are increasing by up to 0.5pc.”

Standard variable rate mortgages are currently at their highest level for more than 13 years. The average standard variable mortgage is now 4.91pc, the highest since February 2009 when the average rate was 4.94pc, according to analyst Moneyfacts.

Rachel Springall from Moneyfacts said: “HSBC are moving in the same direction as many other large lenders, and that is up.”

The Bank of England’s interest rate decision was broadly in line with expectations, although a six to three split between policymakers over a possible larger hike gave the outcome a hawkish tilt.

The pressure on Threadneedle Street had been cranked up a notch after the US Federal Reserve, the world’s most powerful central bank, raised interest rates 0.75 percentage points on Wednesday, which was the biggest move in 28 years.

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