Bank boss ‘trying to limit the pain’ as mortgage rates continue to rise
HSBC’s UK boss has warned that mortgage costs have further to rise but it is “trying to limit the pain”.
Ian Stuart told Sky’s Ian King Live it had 300,000 customers coming off fixed rate deals this year and admitted they faced a shock in the current market.
“If you took a mortgage maybe two years ago or five years ago, myself included, you will come off a mortgage rate of around 1.5% and your new mortgage is going to cost something closer to 5%.
“This is not a subject to be flippant on. This is a very, very important topic in UK society today.”
He was speaking as financial markets and economists widely expect the Bank of England to maintain, next week, its policy of raising Bank rate to combat inflation.
The 12 consecutive increases to date have been a main factor behind those rising mortgage costs.
Employment data, due on Tuesday, is tipped to only bolster pressure on the Bank to continue raising borrowing costs as economists expect wage growth to have ticked up further in April.
Policymakers see strong salary increases as a means of fuelling inflation ahead.
They are also worried about so-called core inflation remaining stubbornly high as more volatile elements, such as energy costs, ease.
Raising Bank rate is a blunt tool.
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‘Monthly mortgage £1,450 from £790’
While it is aimed at taking demand, and therefore price pressures, out of the economy, it also adds to household costs through mortgages as they are reflected in deals that track Bank rate and, later, new fixed rate offers.
Data from Moneyfacts.co.uk on Monday showed the average two-year fix at a 5.86% rate.
The five-year figure stood at 5.51%.
The rising cost of mortgages was also exacerbated by the financial market fallout that followed the Truss government’s mini-budget of last September.
Recent research by Labour estimated that the actions of the Bank and the former PM meant the average homeowner was paying an extra £150 a week.
HSBC, like rivals, is fearful of a growing number of defaults as housing costs further fuel the wider cost of living crisis.
Mr Stuart said it was prioritising existing customers though he admitted that it had taken some market share recently as it moves to keep to its promise that its rates would be responsible.
He made his remarks days after HSBC UK revealed it was working to increase capacity for mortgage borrowing after it was forced to temporarily make its products unavailable to brokers last Thursday.
Increased lender rates across the market had resulted in significant demand.
HSBC said it had taken the decision to temporarily withdraw rates available via broker services to ensure the bank could stay within its operational capacity and meet its customer service commitments.
Its broker products are available again and all of its products and rates for existing customers have not been affected.
Mr Stuart also used his interview to speak about his excitement for the future as the bank relaunched the UK arm of Silicon Valley Bank – the start-up lender that it bought for the token sum of £1 when its US parent collapsed in March.
Innovation Banking, he said, was a crucial cog for tech businesses and he assured customers HSBC would maintain its identity and culture, preserving what it had bought.
Some of the biggest US technology companies have pledged billions of pounds of investment to turbocharge Britain’s artificial intelligence (AI) industry, as the two countries announce a landmark technology deal.
Nvidia, Microsoft, Open AI and Google made a flurry of announcements to coincide with President Trump‘s state visit to the UK.
They include plans to build data centres and invest in AI research and engineering.
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Sir Keir Starmer described the agreement, which both leaders will sign over the coming days, as “a generational step change” in Britain’s relationship with the US.
The deal will see both countries cooperate on AI, quantum computing and nuclear energy, with investment in modular reactors revealed earlier this week.
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The prime minister said it was “shaping the futures of millions of people on both sides of the Atlantic, and delivering growth, security and opportunity up and down the country”.
The government said the deal would deliver thousands of jobs, with a new AI Growth Zone in the North East of England earmarked for 5,000 jobs.
The region will host a new data centre developed in partnership with ChatGPT developer OpenAI, the US chip giant Nvidia and the British data centre company Nscale. The UK government will supply energy for the project, which will be based in Blyth.
Jensen Huang, chief executive of Nvidia, who has previously drawn attention to Britain’s inadequate levels of digital infrastructure, said: “Today marks a historic chapter in US-United Kingdom technology collaboration.
“We are at the Big Bang of the AI era – and the United Kingdom stands in a Goldilocks position, where world-class talent, research and industry converge.”
Nvidia chief executive Jensen Huang. Pic: Reuters
The Blyth data centre is part of Stargate, Open AI’s infrastructure project to build large data centres across the US.
The company has also developed sites in Norway and the UAE. Nvidia, which provides the graphic processing chips (GPUs), expects to generate $20bn (£14.6bn) by the end of this year from “sovereign” deals with national governments over the coming years.
Sam Altman, OpenAI’s chief executive, said: “The UK has been a longstanding pioneer of AI, and is now home to world-class researchers, millions of ChatGPT users and a government that quickly recognised the potential of this technology.
“Stargate UK builds on this foundation to help accelerate scientific breakthroughs, improve productivity, and drive economic growth.”
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Microsoft also pledged £22bn, its largest ever investment in the UK, to expand data centres and construct the country’s largest AI supercomputer.
Meanwhile, Google owner Alphabet pledged £5bn to expand its data centres in Hertfordshire and fund its London-based subsidiary DeepMind, which uses AI to power cutting edge scientific research. The company was founded in Britain and acquired by Google in 2014.
Other investments include £1.5bn from AI cloud computing company CoreWeave and £1.4bn from Salesforce.
There are “no discussions around taxpayers’ money” to prop up Jaguar Land Rover’s (JLR) suppliers, according to the prime minister’s official spokesman, as the carmaker grapples a lengthening production shutdown following last month’s cyber attack.
JLR factories fell silent more than two weeks ago. While it is damaging for the company, it represents a perilous loss of business for the supply chain which has also been forced to send workers home.
Some have already lost their jobs.
Unions and the business and trade committee of MPs were among those to request the possibility of aid to prevent job losses and employers going bust as the disruption drags on.
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What happened?
It was revealed on 1 September that global production at JLR had been stopped following a cyber attack.
IT systems were taken offline by the company under efforts to limit penetration and damage.
The company appeared confident initially that manufacturing could resume but restart dates have been consistently put back.
What damage was done?
Jaguar Land Rover has said very little about the extent of the attack.
But it admitted last week that some data had been accessed. It gave no further details.
Who is to blame?
A criminal investigation is continuing.
A group of English-speaking hackers claimed responsibility for the JLR attack via a Telegram platform called Scattered Lapsus$ Hunters, an amalgamation of the names of hacking groups Scattered Spider, Lapsus$ and ShinyHunters.
Scattered Spider, a loose group of relatively young hackers, were behind the Co-Op, Harrods and M&S attacks earlier in the year.
It is widely believed that M&S paid a sum to regain control of its systems after it was targeted with ransomware though it has refused to confirm if this was the case.
How is this affecting JLR as a business?
The business was highly profitable last year but 2025 has seen new trade war challenges in addition to the cyber attack: File pic: Reuters
JLR typically produces about 1,000 vehicles a day.
Production staff are being paid but kept away from plants at Halewood on Merseyside, Solihull in the West Midlands, and its engine factory in Wolverhampton. It is the same story for workers at sites in Slovakia, China and India.
JLR revealed on Tuesday that production lines would now remain shut until at least 24 September.
David Bailey, professor of business economics at the Birmingham Business School, told the PA news agency: “The value of cars usually made at the sites means that around £1.7bn worth of vehicles will not have been produced, and I’d estimate that would have an initial impact of around £120m on profits.”
JLR achieved a pre-tax profit of £2.5bn for the financial year ending 31 March 2025, so should be able to absorb such a hit.
Sales and service operations continue as normal at its retail partners but the longer the disruption goes on, so do the risks to its inventories and bottom line.
Why does its supply chain need help?
JLR’s supply chain includes everything from components to paint. Pic: Reuters
This is the part of the operation that was always bound to suffer most in the event of a global JLR production shutdown.
No manufacturing means no need for parts.
The company usually depends on a ‘just in time’ supply chain to feed its factories and keep production lines running smoothly.
The Unite union has appealed for a COVID-style furlough scheme to prevent job losses and the risk of affected companies, often small or medium-sized firms, being forced out of business.
JLR’s operations are understood to directly support more than 100,000 jobs in the UK though that sum doubles through indirect roles.
The loss of any major supplier would risk further production delays once JLR’s IT systems are back online.
It is currently understood that the vast majority of directly affected workers remain in their jobs but have either been sent home or are on restricted tasks.
JLR suppliers Evtec, WHS Plastics, SurTec and OPmobility have had to temporarily lay off roughly 6,000 staff while a growing number of other firms are cutting workers, with temporary or contracted workers most likely to be affected.
What has the government said?
In addition to the remarks by the PM’s official spokesman, minister for industry Chris McDonald told Sky News: “We know this is a worrying time for those affected by this incident and our cyber experts are supporting JLR to help them resolve this issue as quickly as possible.
“I met the company today to discuss their plans to resolve this issue and get production started again, and we continue to discuss the impact on the supply chain.”
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