HSBC has followed in the footsteps of Barclays and cut mortgage rates across much of its product range.
The price reductions, which have been described as ‘impressive’ by one broker, have been made to fixed rates for residential customers but also for buy-to-let borrowers and those with energy efficient properties.
It comes a week after Barclays announced, in a move which went against the grain, it was cutting a large number of its mortgage rates.
Up until this point, lenders had been hiking their interest rates in response to increasing Swap rates, which mortgage providers use to set their pricing.
Last week, as Swap rates began to ease, Barclays announced its cuts and now HSBC has followed suit.
Nicholas Mendes, mortgage technical at John Charcol, said HSBC’s changes reflected a ‘steadier market’ in which Swap rates were stabilising and remaining lower.
The average two-year fixed rate has in fact decreased in the last week according to Moneyfactscompare.co.uk. It’s data shows the typical rate last Wednesday (27 November) was 5.53% but is today (Wednesday 4 December) it’s 5.51%. Five-year fixed rates have remained at 5.28% since last week.
Following HSBC’s price changes, Mendes said: “For borrowers, this is an encouraging development to start December. Whether you’re locking in a fixed deal for a new home, borrowing more, or securing a better rate for an energy-efficient property, these reductions are well-timed.
“That said, it’s still early days to call this a ‘price war’, as not all lenders have moved in unison. The stability in swaps has simply given lenders like HSBC the room to adjust.”
The big question now remains, will more lenders follow the trend? Mendes wasn’t sure but he advised anyone due to take out a mortgage – whether to purchase a property or to remortgage their current home – to seek advice.
He added: “For now, HSBC’s rate cuts are a strong signal that the market is gradually moving towards stability after a challenging few months for both lenders and borrowers.
“Borrowers should remember the importance of speaking to a mortgage broker, who can provide tailored advice and help navigate the changing landscape. Brokers are well-placed to keep borrowers informed of the latest developments and ensure they don’t miss out on the most competitive deals.
“For now, HSBC’s rate cuts are a strong signal that the market is gradually moving towards stability after a challenging few months for both lenders and borrowers.”
