HSBC is among several mortgage lenders announcing cuts to rates in what brokers say is “encouraging” news for homeowners.
The lender – one of the biggest in the UK – is cutting rates on a range of home loans from tomorrow, including for those who are remortgaging, and those buying.
It comes as other lenders have also cut rates in recent days.
MPowered cut its three-year fixed rate mortgages for new purchase and remortgage customers on Friday, while Gen H is cutting rates for those with small deposits from Monday evening.
The cuts follow a reduction in the interest rate charged on loans by Barclays last week, but the scale of HSBC’s cuts will not be unveiled until tomorrow morning.
Barclays made a number of reductions of up to 0.2 percentage points, including dropping its 5.49 per cent two-year deal for those with 10 per cent deposits from 5.49 per cent to 5.39 per cent.
Prior to this, mortgage lenders had been increasing rates for weeks, after the policies in the Budget sent predictions for inflation upwards, and swap rates – which are what fixed mortgages are based on – went upwards as well.
Nick Mendes of broker John Charcol said: “HSBC’s adjustments reflect a steadier market, with swap rates stabilising and holding lower in recent days.”
He added: “For borrowers, this is an encouraging development to start December. Whether you’re locking in a fixed deal for a new home, borrowing more, or securing a better rate for an energy-efficient property, these reductions are well-timed.”
However, he said prices are not yet competitive enough to be thought of as a price war.
“Not all lenders have moved in unison. The stability in swaps has simply given lenders like HSBC the room to adjust.
“With no changes to other interest rates at this time, all eyes will be on whether more lenders follow suit in the coming weeks. For now, HSBC’s rate cuts are a strong signal that the market is gradually moving towards stability after a challenging few months for both lenders and borrowers.”
Some brokers had predicted last month that rates might not come down this side of Christmas, with swap rates having endured weeks of rises.
Economists said October’s Budget was likely to mean a higher peak for inflation and this meant that markets began to predict that the Bank of England would cut interest rates more slowly than previously predicted.
This then had a knock-on effect on swap rates, which mortgage rates tend to follow.
Prior to Barclays’ cut last week, the last mortgage rate cut from one of the so-called big six lenders was by HSBC in early October.
Until recently, those with large deposits were able to secure mortgage rates of below 4 per cent, but the last sub-4 per cent deal available across the UK was pulled last month.