HSBC has become the latest lender to cut mortgage prices, ahead of a big week of economic data that could play a big role in determining when the Bank of England will start cutting interest rates.
As usual, the banking giant did not announce its new rates, which will come into effect from tomorrow (16 January), except to note that they are lower,
Whether the reductions continue likely depends on December’s inflation reading, published this week. A number of below-expectations readings led to lenders cutting rates in the expectation that the Bank of England will be able to bring its base rate down soon. Inflation is expected to tick down slightly to 3.8%, a dramatic fall from its peak of 11.1%, but still above Threadneedle Street's 2% target.
Jobs data, published tomorrow, will also play a key role in the Bank of England’s rate decisions, and therefore mortgage prices. Wages had been growing at close to a record pace, which Bank of England Monetary Policy Committee members warned was too fast to be compatible with its 2% inflation target. But recent data suggests that the labour market is rapidly loosening. The unemployment rate is expected to tick up to 4.3%.
Ben Perks, managing director at Orchard Financial Advisers, said: “It's great to see another round of rate reduction from HSBC, all the more so ahead of this week's inflation print. HSBC have made several cuts in quick succession so it shows a real appetite to lend and is fantastic news for the consumer and the wider property market.
“Let's hope more lenders show this level of eagerness to lend. It's always great to see a bit of healthy competition on rates.”
Katy Eatenton, mortgage and protection specialist at St. Albans-based Lifetime Wealth Management, said the cuts put pressure on Nationwide - the only “big six” lender that hasn’t repriced in the current wave – to follow suit.
She said: “What a great start to the week. The only high-street lender that hasn't repriced is Nationwide currently. Swap rates are still edging down so the reductions look set to continue. It's blue Monday today but borrowers will be feeling anything but.”
