HSBC Malta Raises Mortgage Rates Amid ECB Hikes

HSBC Malta has announced that it will raise mortgage interest rates for its customers from October, affecting those who have home loans with the bank. The new annual borrowing rate of 2.75% is set to leave borrowers paying more interest on their outstanding balances.

The increase follows recent European Central Bank interest rate hikes, but Maltese banks like HSBC and Bank of Valletta (BOV) set their own lending benchmarks, meaning the ECB rates do not directly translate into identical increases for customers.

According to HSBC's notice, the new annual borrowing rate is 0.50 percentage points above its Home Loan Base Rate of 2.25%, resulting in a total annual rate of 2.75%. This means that borrowers will face higher monthly repayments, with the size of the increase depending on their previous interest rate, outstanding balance, and remaining mortgage term.

For example, someone owing €200,000 with 25 years left on their mortgage would pay approximately €872 a month at 2.25% interest. At 2.75%, the repayment would rise to around €923, an additional €50 a month, or roughly €600 a year.

BOV, on the other hand, has decided to keep its lending base rates unchanged through December, citing its strong financial position, customers' interests, and competitiveness as reasons for maintaining stability. This decision could strengthen BOV's appeal to borrowers comparing mortgage costs.