This move comes as the bank aims to stay “within its operational capacity” amidst a surge of customers rushing to secure deals before further rate increases. HSBC’s withdrawal from the mortgage market echoes actions by other lenders such as Nationwide and Lloyds who have also significantly raised their mortgage rates.

This volatility in the UK mortgage market has seen a near 10% withdrawal of mortgage products due to rising interest rates, with about 800 residential and buy-to-let deals removed according to Moneyfacts. Simultaneously, average rates on two-year and five-year fixed deals have seen an increase. Nationwide building society announced mortgage rates on new fixed deals would increase by up to 0.45 percentage points due to higher-than-expected inflation figures.

The Bank of England’s current rate stands at 4.5%, but economists are predicting a peak of 5.5%. As a result, homeowners are facing steep increases in their monthly mortgage payments, especially those coming to the end of two-year fixed-rate deals that were secured during the record-low interest rates of the pandemic.

Analysts from ratings agency Moody’s are warning of potential housing market corrections and financial distress for households. Moody’s predicts a 10% drop in house prices over the next two years due to the recent surge in mortgage rates and persistently high inflation, potentially leading to an erosion of 5% of mortgage holders’ disposable income if rates remain at current levels, The Telegraph reports.

This upheaval in the UK mortgage market has had a significant impact in Scotland as well. The sudden withdrawal of mortgage deals and the looming interest rate hikes are affecting Scottish homeowners and potential buyers, who are now under pressure to secure new deals before they vanish or become even more expensive.

HSBC, alongside other lenders, will likely relaunch their mortgage deals on Monday, albeit with potentially higher rates, as they adjust to the changing economic landscape. Existing HSBC customers in need of refinancing can still acquire remortgage loans, though rates have increased across the board.