HSBC has become the latest big UK lender to announce across-the-board mortgage interest rate cuts, with leading names announcing reductions of up to one percentage point.
The bank’s new deals announced on Wednesday include a headline-grabbing five-year fixed remortgage deal of 3.94% for those borrowing up to 60% of the property value.
From Thursday, HSBC’s two-year fixed rate for remortgages will dip below 4.50% for the first time since early June last year, with the headline rate hitting 4.49%, again for those with at least 40% equity in their home.
For those looking to fix longer term, HSBC is now offering a 10-year fixed rate deal starting from at 3.99%, suggesting that the bank is convinced rates are only going lower.
The cuts come after Britain’s largest mortgage lender, Halifax, cut the price of its two-year fixed-rate remortgage from 5.64% to 4.81% on Tuesday. Taking up that new rate on a £200,000, 25-year mortgage would cut monthly repayments from £1,245 to £1,147, saving £98 a month or £1,176 a year.
Leeds Building Society and a number of smaller, specialist lenders announced that they too were cutting rates.
Many homeowners who had to take out new mortgages last year saw their monthly repayments double as they came off cheap deals taken out several years earlier. However, experts have predicted that in 2024 there could be as many as four Bank of England interest rate cuts, prompting providers to start cutting fixed offers.
David Hollingworth, an associate director at L&C Mortgages, said the latest deals were some of the lowest since the rise in rates last summer.
“These cuts are just the latest salvo in an increasingly fast-moving market,” he said. “Although borrowers coming to the end of their current fixed rate this year will still be looking at a rise in payments, these new lower rates will at least take some of the sting out of the inevitable rise.”
Hollingworth said HSBC’s move was notable in that its rates were on offer to borrowers looking to remortgage, a departure from the recent trend of pricing that favours those moving home.
“With large numbers of borrowers anxiously approaching the expiry of a fix taken during the ultra low rate period, this is a welcome move and hopefully a signal for more lenders to follow suit, improving options for those facing payment shock. We thought the New Year would start with a bang and that’s proving to be the case,” he added.
Simon Bridgland, a director at the mortgage broker Release Freedom, has predicted “a manic week” of rate cuts, suggesting that much better times are returning for mortgage buyers.
Last year was an annus horribilis for the mortgage market, as banks struggled to cope with the fallout that followed Liz Truss’s now infamous mini-budget in autumn 2022.
Homeowners were given a boost last month when swap rates fell heavily after data revealed November’s rate of inflation had come in at a lower than expected 3.9%.
