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HSBC cuts rates prompting speculation on further reductions

  • 25/07/2023
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HSBC cuts rates prompting speculation on further reductions
HSBC has become the latest lender to reduce its mortgage rates as swaps continue to fall in light of easing inflation.

The reductions will take effect tomorrow, and apply to residential first-time buyer, home mover, remortgage and international purchase mortgages up to 90 per cent loan to value (LTV). This will include select fixed and tracker deals on two, three and five-year terms. 

For example, a two-year fixed purchase mortgage at 60 per cent LTV with a £999 fee now has a rate of 6.14 per cent, down from 6.24 per cent. A five-year fix purchase deal at 85 per cent LTV, also with a £999 fee, has been reduced by 0.2 per cent to 5.74 per cent.

Across its remortgage options, HSBC has cut the rate of a five-year fix at 60 per cent LTV by 0.2 per cent to 5.64 per cent. This has a £999 fee. A two-year tracker deal at the same LTV tier, also with a £999 fee, has been lowered by 0.15 per cent to 5.14 per cent.

For existing borrowers, a two-year tracker at 60 per cent LTV with a £999 fee is now priced at 5.14 per cent, down from 5.29 per cent.

A spokesperson for HSBC said: “We’re firmly focused on supporting customers in the current environment. Following review, we are pleased to announce cuts to mortgage rates across our residential mortgage range in addition to reintroducing a cashback option of £300 on a number of deals.”


Some positive news

Nick Mendes, mortgage technical manager at John Charcol, said it had been a positive week as swap rates stabilised and headed downwards. 

He added: “We are starting to see lenders reducing their fixed rate products with HSBC the latest in what will hopefully be the start of many over the next few weeks.” 

Mendes suggested that lenders would be slow to reduce rates to avoid being market leading and getting swamped with applications, and warned borrowers not to take anything for granted despite the favourable outlook. 

“It is still advisable to secure a deal in advance, and regularly review with your broker to ensure you leave plenty of time to switch to a better rate before your deal is due to complete in the event rates reduce further,” he said. 

Jamie Lennox, director at Dimora Mortgages, said the reductions would be a “huge relief” to borrowers and as HSBC was the largest lender to cut rates, he expected other mainstream providers to follow suit. 

“However, mortgage holders will still need to be mindful that the rates on offer will likely be more expensive than they have become accustomed to in recent years. They would be prudent not to assume they should hold off so rates can come down further as we have seen twice in the past 12 months that rates can swing the other way at a drop of a hat,” Lennox added. 

Neezam Romjon, co-founder at Rebus Financial Services, said HSBC led the way alongside Accord, adding: “This is a huge opportunity for lenders to demonstrate that they are not purely focused on profiteering during a difficult time for mortgage borrowers.” 


Another rate war? 

Other brokers hinted that there could be more competitive pricing on the horizon. 

Paul Welch, founder and CEO at Large Mortgage Loans, said: “In a market starved of new mortgage business, expect other high street lenders to match HSBC’s recent rate cuts. Competing on price is the game now.” 

Kylie-Ann Gatecliffe, director at KAG Financial, added: “I think it’s safe to say this could be the start of another rate war, similar to the one we saw early this year after the disaster that was the mini Budget.  

“As we have seen other lenders reduce their rates over the past week, now that the high street lenders are involved I do believe we will see more of this. They may not fall rapidly, as this could also shake the market, but a reduction at a time when people are worried about mortgage payments is a step in the right direction.” 

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