LONDON (Reuters) – Many mortgage borrowers could struggle to manage more expensive home loans this year, one of Britain’s top bank bosses said on Tuesday, as the cost of living crisis deepens.
“Headwinds are ahead of us, not behind us,” Ian Stuart, CEO at HSBC UK, told a hearing of lawmakers as he issued “a health warning” about customers’ finances that ran counter to reassuring statements from some other executives.
Some 222,000 of HSBC’s customers would need to refinance loans this year, with most likely to face higher costs, Stuart told the cross-party Treasury Select Committee.
Tracker mortgages, where repayments move more closely in line with base rates, were rising in popularity among customers hopeful that interest rates might soon start to fall back again, Stuart said.
“But the vast majority of customers want to sleep easy at night, they want a fixed rate. There is no distress out there today but I’d put caution into that,” he said.
Britain’s big banks, which start reporting annual results next week, were also pressed to answer criticism that they were too slow to pass on the benefits of recent central bank rate hikes to savers.
“My constituents are cynical that you put the rates on mortgages up much faster than what you give back on savings,” said Angela Eagle, a member of the committee.
The Bank of England last week pushed its key Bank Rate up to 4%, its highest level since 2008, as it tries to smother inflation, but many savings products still offer less than 1%, Eagle said.
Charlie Nunn, CEO of Lloyds Banking Group, said banks were not putting profits before customers but were normalising lending margins to levels last seen in 2018, with a view to building their own reserves ahead of the downturn.
“We need to make sure we have sufficient financial resilience to support customers through a recession,” Nunn said.
(Reporting By Sinead Cruise and Lawrence White; editing by Barbara Lewis)