Some of Britain’s biggest lenders have hiked rates on their fixed-term mortgages despite a steep interest cut by the Bank of England designed to ease the pressure on millions of borrowers.
Lenders including HSBC increased charges on some loans after the Bank slashed the base rate from 0.75pc to 0.25pc.
A cut of this magnitude would normally result in mortgages becoming cheaper – saving families hundreds of pounds and easing any financial pressure as the coronavirus outbreak brings the country to a halt.
Most lenders have passed the savings on to customers with tracker rate mortgages. But HSBC, the country’s sixth biggest mortgage lender, has increased the interest rate on its fixed-term loans by as much as 0.1 percentage points.
Accord Mortgages – which is part of Yorkshire Building Society – and Leeds Building Society both increased the price of new fixed-rate loans.
Nationwide also announced that some tracker mortgage rates would increase by 0.15pc, meaning new customers would not benefit from the full Bank Rate reduction.
Industry experts said lenders were seizing the chance to boost profits instead of passing on lower rates as is expected following a Bank Rate cut.
Colin Payne, of financial planner Chapelgate, said: “Rates have been so low for so long that lenders have seen this as a way of boosting margins. Without a doubt other lenders will follow suit.”
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Aaron Strutt, of mortgage broker Trinity Financial, said: “The last thing borrowers expected was for lenders to increase the cost of their fixed rates following such a huge Bank Rate reduction.”
Spokesmen for both Accord and Leeds Building Society said that the decision to increase these mortgages was taken before the Bank Rate cut was announced. However, both declined to say whether they would reverse this decision.
HSBC said its rates remain competitive and that it had lowered its variable-rate deals in line with the Bank Rate cut. It has also put in place measures to support customers struggling with coronavirus.
Other banks have taken action to help customers affected by Covid-19. First Direct has announced customers can access fixed-rate savings accounts early without incurring penalties and have offered to extend mortgage terms for those in financial hardship.