HSBC temporarily withdraws mortgage deals for new borrowers

HSBC, one of the largest banks in the world, has temporarily suspended the issuance of mortgage contracts for new borrowers due to strong demand ahead of expected rate hikes.

HSBC, one of the largest banks in the world, has temporarily suspended the issuance of mortgage contracts for new borrowers due to strong demand ahead of expected rate hikes. This move comes amidst rising inflation and predictions that the Bank of England may raise interest rates higher than previously forecast, from the current 4.5% to 5.5%. HSBC has said that such agreements could be resumed on June 12.

The bank stated that this was done to ensure they could maintain their operational capacity and meet their customer service commitments. This is the first time that HSBC, which accounts for nearly 25% of the home loan market, has pulled out of the mortgage credit market since the aftermath of a small budget plan under Prime Minister Liz Truss' administration.

It is not just HSBC that is making changes to its offerings, Nationwide, the UK's largest building society, has also announced that it will be raising some fixed mortgage rates on new loans from June 9th to ensure "sustainable operations". This follows similar announcements from other banks including Barclays and Santander.

There have been criticisms of HSBC's move, with some brokers stating that banks should give at least 24 hours notice before suspending mortgage agreements. However, given the circumstances and strong demand for mortgages, it is understandable why HSBC has taken this step.

Mortgages are an important part of the economy, and the potential rise in interest rates can have a significant impact on borrowers. With inflation rising, it is clear that banks need to take measures to protect themselves while still ensuring they can provide their services to customers.

While HSBC's temporary withdrawal of mortgage contracts may come as a surprise to some, it is necessary for the bank to maintain its operations and meet its customer service commitments. With interest rates potentially set to rise, it is important for borrowers to be aware of these changes and to take appropriate action. It remains to be seen how long this suspension will last and what other measures banks may take in the coming weeks and months.