HSBC customers face higher mortgage bills as BOV holds rates steady

HSBC Malta is raising mortgage interest rates for affected customers from October, leaving borrowers facing higher monthly repayments after years of relatively stable home-loan rates in Malta.

Its main rival, Bank of Valletta, has confirmed it will keep its lending base rates unchanged through December.

The Shift can reveal that HSBC has already notified affected customers that their annual borrowing rate will be 2.75%. The increase will leave these households paying more interest on the money they still owe.

The size of the increase in monthly repayments will depend on each borrower’s previous 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.

For a borrower owing €100,000 over the same period, the increase would be about €25 a month. Someone with €300,000 outstanding would pay approximately €76 more.

These examples assume a rise from 2.25% to 2.75%, with the repayment term unchanged. They exclude insurance and fees; individual customers’ increases may differ.

HSBC’s notice sets the rate at 0.50 percentage points above its Home Loan Base Rate, currently 2.25%. Adding the two produces the total annual rate of 2.75%.

The decision follows recent European Central Bank interest rate increases. However, Maltese banks set their own lending benchmarks, so an ECB rise does not automatically translate into identical increases for their customers.

BOV has opted to hold its rates steady, a decision that could strengthen its appeal to borrowers comparing mortgage costs.

Following its quarterly review, BOV announced that its home-loan and business lending base rates would remain at 2.15%, while its personal lending base rate would stay at 2.45%.

The bank cited its strong financial position, customers’ interests, the economic outlook and its competitiveness as reasons for maintaining stability.

For customers with mortgages linked to BOV’s benchmark, the announcement means no increase resulting from a base-rate change through December.

BOV said it would continue monitoring ECB decisions, expectations for future interest rates and geopolitical pressures. Its next review is scheduled for December.

APS and BNF, formerly Banif, have yet to announce their decisions.

For now, HSBC’s increase marks a break from the recent stability for affected borrowers, while BOV’s decision offers its customers some reassurance through the end of the year.