HSBC will become the first 'big six' lender to offer a five-year fixed-rate mortgage at below 4% since March, as it became the latest in the sector to accounce a range of rate cuts.
The banking giant joins Generation H, which was the first lender to breach the 4% threshold in the current wave of price cuts. But as one of the largest players in the market, HSBC's move could signal that other big lenders will soon follow.
However, the 3.94% rate is only available for a remortgage at 60% LTV.
An HSBC UK spokesperson today said: “At HSBC UK, we are always striving to support new and existing mortgage customers whether they are moving onto or up the property ladder, or looking to remortgage with us. Our new fixed mortgage rates will see significant cuts across the board which will be a welcomed move. Specifically, for customers wishing to remortgage, our rates will start from 3.94% for a 5 year deal at 60% LTV with a £999 fee.”
Generation H also cut its interest rates further today, bringing all of its five-year fixes under the 5% mark.
Pete Dockar, Gen H Commercial Director, said: “We were thrilled to have been able to have introduced the first sub-4% to the market – making rate reductions whenever we can is core to our ethos. Today, we’re excited to show we can help people no matter their deposit size, whether they’re remortgaging in the 60% LTV band or buying their first home with a smaller deposit. We make these reductions because they make a difference to real people. That’s why we’re here.”
The country’s top lender Halifax, slashed the price of many of its products yesterday, reducing rates on some loans by almost a full percentage point.
Brokers said they expect rivals to follow suit in the coming days, after gilt yields - used to price mortgages - plunged at the end of December.
Justin Moy, managing director of Essex-based EHF Mortgages, said: “Most lenders will inevitably cut rates in the coming days, buoyed by lower swap rates and that determination to make a bold start to those 2024 lending targets.”
Adam Smith, founder of Alfa Mortgages, added: “Without a shadow of a doubt, I am confident that in the upcoming days and weeks lenders will undoubtedly slash rates to maintain a competitive edge.”
Peter Stokes, director of mortgages at Davidson Deem, said prices hadn’t yet caught up to market rates as lenders had been slower to reprice in the post-Christmas period.
He said: “We often see large lenders around Christmas go into a mini-shutdown, as they operate on a skeleton staff, and they expect many brokers to go into a week of hibernation. During this time, market rates have continued to fall, so lenders have some catching up to do.”
City markets see the Bank of England cutting rates to 4% or lower this year, with the first reduction expected in May. But some traders pared back their bets on rate cuts this week amid caution over events in the Red Sea.
Graham Cox, founder of Self Employed Mortgage Hub, said “there may be an air of caution from lenders if that continues”.
