HSBC to cut its mortgage rates from Thursday in a "welcome move" for borrowers

HSBC has just announced that it is set to cut its mortgage rates from Thursday in a "welcome move" for borrowers.

Actual rates will be available to review from Thursday, but the downward trend will be comforting for both brokers and borrowers.

Brokers told Newspage that some of its fixed-rate deals could fall below 5%. HSBC currently offers a two-year fix at 5.01% and a five-year fix at 5.03%.

Experts said the reduction could encourage competing lenders to follow, providing relief for homebuyers and borrowers approaching the end of fixed deals. 

But they cautioned that one lender cutting rates does not prove the market has stabilised, particularly while swap rates and gilt yields remain elevated.

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said HSBC's move will encourage other lenders to follow suit.

He added: "Whilst we are awaiting news of the new rates, the mere whiff of improvement is enough to put a bounce in the step of borrowers and brokers. 

“The market feels like it has plateaued over the last week or so, still around 1% more than we were just a few months ago, but to see HSBC move will encourage other lenders to follow over the coming days.”

Tracey Dixon, Buy-to-Let Mortgage Specialist & Owner at Cardiff-based Pure Mortgage and Protection, said it's “encouraging”.

She added: "A welcome move from HSBC, particularly for borrowers approaching the end of their fixed deal. We’ll need to see the new rates and fees before judging the overall value, but any improvement in monthly payments will be welcome. 

“One lender’s reduction doesn’t confirm the market has stabilised, although it’s an encouraging sign.”

Aaron Strutt, Product and Communications Director at London-based Trinity Financial, said HSBC will now likely have deals below 5% once again.

He added: "It looks like HSBC will be offering sub-5% fixes from tomorrow which is another step in the right direction. HSBC currently has a 5.01% two-year and a 5.03% five-year fix. It has been an unusually quiet week with very few changes from the big banks and building societies bringing some welcome stability. 

“With so much talk of base rate rises and the war in Iran dragging on it seems unlikely fixed rates will get a huge amount cheaper but the mortgage market is notoriously hard to predict. Yorkshire Building Society currently has a 4.83% two-year fix and 4.95% five-year fix, while Santander has a 4.92% two-year fix and a 4.93%. Thankfully there are lots of rates to choose from well below 6%.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said he will be waiting for the details to come out tomorrow.

He added: "HSBC is the latest lender to nudge rates down, which is much better than watching them head the other way. We’ll reserve judgement until we see the actual numbers tomorrow, but borrowers and brokers will take comfort from the direction of travel. 

"In the mortgage market, boringly cheaper is exactly the sort of excitement we like. The champagne can stay in the fridge until tomorrow."

Harry Goodliffe, Director at Winchester-based HTG Mortgages, said this is good news.

He added: “HSBC being one of the first to cut rates is a welcome piece of news for borrowers and hopefully a sign of where the market is heading. Lenders are currently fighting hard for business, and even a small reduction can make a real difference to monthly payments. 

"Let’s hope more lenders follow suit, or will swap rates and current market uncertainty put the brakes on any further cuts. Either way, competition between lenders is good news for borrowers.”

Michelle Lawson, Director at Fareham-based Lawson Financial, added: “HSBC's latest reduction today is welcomed but yet to be celebrated. Swaps and Gilt rates are still increasing and the market is still volatile so the storm isn't subsiding yet.”

ENDS