Rates Up For Those With Small Deposit
Following continuing uncertainty on the money markets, HSBC has raised its mortgage rates for those with less than 25% deposit. B&B has announced redundancies and the PM travels to the US for financial discussions.
The recent market turmoil is beginning to have an effect on mortgage rates. HSBC said it had been forced to raise its rates as it put up first-time buyer fixed rates by 0.3% to 6.27%. It is likely to herald another batch of rate rises as lenders get to grips with events on the money markets.
Unfortunately the move will hit those hoping to get a foot on the property ladder as HSBC’s new rate is only applicable to those with a deposit less than 25%.
HSBC’s rate rise came on the day that Bradford & Bingley announced that it was making over 350 job cuts as its share price plunged. Its office in Borehamwood is to close to reduce costs. Mortgage applications are dealt with there, but there has been a massive drop in business in recent months. There may be some opportunities to relocate to Bingley in West Yorkshire, but it is probable that most will be left without work. Workers were said to be angry, but were reluctant to talk about their plight.
Despite optimism on the money markets earlier in the week about a US bail-out for the banks, this has turned to pessimism as the US Congress has not yet agreed to the deal. On Friday morning there was fresh optimism that the deal might be concluded, but it’s not finished yet.
Prime Minister Gordon Brown is in the US meeting world leaders in discussion about how to tackle the financial crisis.
The HSBC move follows a period in July and August of mortgage rates drifting downwards, but lenders have once again been overtaken by events. The collapse of big financial institutions in the US and the HBOS take-over in the UK has left them all desperate to boost their cash reserves again.
High-risk borrowers will suffer most. Thus those with less than 25% deposit are seen as high risk. Anyone with a deposit of more than that has actually seen a rate cut from HSBC – of 0.2%.
