HSBC announces fixed-rate hikes

HSBC has increased the cost of its fixed-rate mortgages in response to higher funding costs.

The banking giant is the latest lender to hike its rates, with its three-year fixed-rate mortgage for people borrowing up to 75% of the value of their home increasing by 0.15% and its five-year deal going up 0.4%.

It cited the uncertain future of wholesale funding costs as the reason behind the rise on its three and five-year swap rates.

The move comes after Nationwide, Halifax, Cheltenham & Gloucester, and Barclays' lending arm the Woolwich all raised their mortgage costs on fixed deals.

As a result of the price hikes the average interest rate of a two-year fixed rate mortgage is now 5.09%, up from 4.67% at the beginning of June.

The average five-year deal is now 6.04%, up from 5.57% during the same period and some deals pushing through the 6% mark for the first time since December.

While consumers looking for a fixed-rate deal may have to cope with paying higher rates, there is better news for home buyers looking for a mortgage with just a small deposit to put down.

Lenders are gradually increasing the number of products available for people looking to borrow a high proportion of their property's value, with the number of 90% deals rising from 77 to 98 since the beginning of June.

Meanwhile, the number of 100% and 95% loan to value (LTV) mortgages has remained unchanged at 10 and six respectively.

However, the number of different products for people with a 15% deposit has fallen slightly to 190 from 195.

This latest move by HSBC to increase it three-year fixed rate mortgage leaves rates at 4.74% for someone with a 25% deposit and 5.39% over five years.

As a result of the price hikes the Post Office now offers the cheapest five-year fixed rate deal at 4.45% for people with a 40% and HSBC is offering the most competitive deal at a 90% LTV.

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