HSBC has followed in the footsteps of Barclays and cut mortgage rates across much of its product range.
The price reductions, which have been described as ‘impressive’ by one agent, have been implemented in fixed rates for private customers, as well as for borrowers looking to rent out a home and for those with energy-efficient properties.
It comes a week later Barclays announcedin a move that went against the grain, it cut many of its mortgage rates.
Until now, lenders had raised their interest rates in response to rising swap rates, which mortgage lenders use to set their prices.
Last week, as swap rates started to fall, Barclays announced its cuts and now HSBC has followed suit.
Nicholas Mendes, mortgage adviser at John Charcol, said the changes at HSBC reflected a “more stable market” with swap rates stabilizing and remaining lower.
According to Moneyfactscompare.co.uk, the average two-year fixed rate has actually fallen over the past week. The data shows that the typical rate was 5.53% last Wednesday (November 27), but today (Wednesday December 4) is 5.51%. The five-year fixed rate has remained at 5.28% since last week.
Following HSBC’s price changes, Mendes said: “For borrowers, this is an encouraging development going into December. Whether you close a deal on a new home, borrow more or secure a better rate for an energy-efficient home, these discounts come at the right time.
“That said, it is too early to call this a ‘price war’ as not all lenders have taken unanimous action. The stability in swaps has simply given lenders like HSBC room to adapt.”
The big question now remains: will more lenders follow the trend? Mendes wasn’t sure, but he advised anyone looking to take out a mortgage – whether to purchase a home or remortgage their current home – to seek advice.
He added: “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.
“Borrowers need to realize the importance of speaking to a mortgage broker, who can provide tailored advice and help navigate the changing landscape. Brokers are well placed to keep borrowers informed of the latest developments and ensure they don’t miss out on the most competitive deals.
“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.”