HSBC is the latest major UK lender to cut mortgage rates across the board. Leading names have announced reductions up to 1 percentage point.
Banks announced new mortgage deals on Wednesday, including a five-year fixed rate of 3.94% for those borrowing up 60% of their property’s value.
HSBC will offer a two-year fixed rate of 4.49% for those who have at least 40% equity. This is the lowest rate since June, last year.
HSBC now offers a 10-year rate fixed deal, starting at just 3.99%. This suggests that the bank believes rates will only go lower.
Halifax, Britain’s biggest mortgage lender, cut its price for a two-year fixed rate remortgage on Tuesday from 5.64% down to 4.81%. If you take up this new rate, your monthly payments on a £200,000 25-year mortgage will drop from £1,245 down to £1,147. That’s a savings of £98 per month, or £1,176 annually.
Leeds Building Society, as well as a few smaller lenders and specialists announced they would also be reducing rates.
Some homeowners had to get a new mortgage last year and their monthly payments doubled because they were coming off of cheap deals that they took out years ago. Experts predict that there may be up to four Bank of England rate cuts in 2024, which will prompt providers to reduce fixed offers.
David Hollingworth of L&C Mortgages said that the recent deals are some of the lowest rates since the rate rise last summer.
He said that these cuts were just the latest salvo on a market that is moving at an increasing pace. “Although those borrowers who are coming to the end their current fixed rate in this year still face a rise in payment, these new lower interest rates will at the very least take the sting out the inevitable increase.”
Hollingworth noted that HSBC was offering rates to borrowers who were looking to remortgage. This is a departure from recent trends that have favored those relocating.
This is a very welcome step, as many borrowers are anxiously awaiting the expiry date of their fix during the ultra-low rate period. It’s a move that will hopefully encourage more lenders to take the same path, improving the options available for those who face payment shock. “We thought that the New Year’s would begin with a bang, and it is proving to be true,” he said.
Simon Bridgland is a director of the mortgage broker Release Freedom. He has predicted a “manic week” with rate reductions, indicating that mortgage buyers are about to experience a much better time.
The mortgage market endured a traumatic year in 2018, as banks tried to deal with the fallout from Liz Truss’ now-infamous mini budget for autumn 2022.
Last month, swap rates dropped dramatically after it was revealed that the rate of inflation for November had been instead of 3.9% as expected.