HSBC has announced it is offering up to £2,000 cashback to support first-time buyers with the extra costs associated with buying a home.
The offer, available from Wednesday 3 December, comes because the mortgage provider is also going to implement a new round of price reductions.
Nationally, Halifax and Virgin Money announced last week that they were cutting interest rates, just a day after Chancellor Rachel Reeves presented her autumn budget.
Meanwhile, swap rates, which lenders use to set their prices, have also fallen slightly and the chances of a rate cut on December 18 appear more likely.
Moneyfacts’ average mortgage rate is currently 4.91% – up from 4.93% last week and 4.99% on November 1.
Now brokers believe this latest move from HSBC could spark a mortgage rate war – something that would prove hugely beneficial for borrowers about to take out a new deal.
Darryl Dhoffer, founder of Bedford-based The Mortgage Geezerspeaking to Newspage agency, said: “The £2,000 cashback is a brilliant move targeting cash-strapped first-time buyers (FTBs).
“This cashback amount often covers most of the initial completion costs, making the deal psychologically irresistible and immediately lowering the affordability threshold for the FTB.
“Meanwhile, the advance notice of undisclosed interest rate cuts for residential and buy-to-let mortgages will position HSBC to maximize the influx of applications.
“Such a move by a lender of this size signals an aggressive intent to undercut competition and start a mortgage price war. It is a highly effective tactic to gain immediate market share.”
Katy Eatenton, mortgage and protection specialist at Lifelong wealth management based in St Albansalso speaking to Newspage, explained that this could provide a much-needed boost to the real estate market.
“Cash is king and this move by HSBC will provide support to many starters.
“The costs of buying a home are often overlooked, but they bite hard and these types of cashback incentives could provide real value to aspiring homeowners. This could stimulate the market, especially if other lenders follow suit.”