HSBC has introduced a wave of rate cuts across its residential mortgage product ranges today.
Some of the offerings that will be affected by the new rate cuts include the existing residential customer switching / borrowing more range, the residential first-time buyer / home mover range, the residential remortgage range, and the international residential purchase range.
As part of the changes, HSBC will also be reintroducing its cashback incentive across a selection of UK residential remortgage rates.
Customers will be able to choose from either £300 cashback or free standard legal fees incentive across its residential remortgage 2-year fixed and 5-year fixed rate offerings.
The free standard legal fees incentive remains available on all other residential remortgage rates which are not included in the cashback incentive.
These changes mark HSBC as the first high street lender to announce such a wave of fixed rate reductions, following a promising dip in inflation to 7.9% which was announced by ONS last week.
Reaction:
Justin Moy, managing director at EHF Mortgages:
“Seeing the first high street lenders ‘blink’ and reduce products across their residential products is great news.
“There is plenty of pressure on others to follow now, as applications will follow the cheaper rates.
“Perhaps Santander can reverse their decision to increase rates and fall back in line, too?
“We are still right to be nervous, though, given the impending base rate increases on the horizon and the fact that plenty of things can change the mood of the markets on a dime.
“However, this was a welcome email in my inbox this morning.”
Riz Malik, founder and director at R3 Mortgages:
A decrease in rates is always appreciated, and the recent reductions by HSBC and Accord certainly helps today’s battered borrowers. I would not be surprised if more lenders do not follow this strategy this week, as they will be keen to not fall behind. The upcoming base rate decision might not result in as unfavourable an outcome as previously thought, especially considering the recent inflation data.
Nicholas Mendes, mortgage technical manager at John Charcol:
“It’s been a positive week in which swap rates have continued to remain stable and heading on a downward trajectory.
“We are starting to see lenders now reducing their fixed rate products with HSBC the latest in which will hopefully be the start of many over the next few weeks.
“Lenders will be stagnating reductions over the next few weeks to ensure that they do not quickly become market leading resulting in an influx of applications and dampening their service levels.
“While mortgage holders approaching the end of their fixed rate may be tempted to hold fire before securing a deal, one thing we can be certain of is you cannot take anything for granted.
“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 you deal is due to complete in the event rates reduce further.”
Gary Bush, financial adviser at MortgageShop.com:
“It’s truly great news to see some high street lenders reducing their rate offerings based on the positive market feeling now in relation to inflation and what the Bank of England will do in the next meeting.
“It’s humorous, however, to see that some High Street lenders are still increasing their fixed rates and it just shows how out of touch some financial institutions are with public sentiment and strained household budgets.
“As we have stated before, we think that UK fixed rates for the past six weeks have been overcooked and it will be good to see some normality returning to the mortgage market.
“It’s clear that as rates start reducing, locking into a rate up to six months in advance could be a good move if there is the slightest possibility of a downturn occurring between now and then.
“A decent financial advice firm will track any new deals coming to market and make sure that you are reserved on the best rate before the account change takes place.”
Jamie Lennox, director at Dimora Mortgages:
“These reductions will come as a huge relief to thousands of mortgage holders who will have had sleepless nights in recent weeks over the fear of how high rates could go.
“HSBC are the biggest lender to reduce rates so far and hopefully should fuel more of the big 6 lenders to follow suit in the days and weeks to come.
“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.”
Neezam Romjon, co-founder at Rebus Financial Services:
“HSBC leads the way, alongside Accord, with these rate reductions.
“This is a huge opportunity for lenders to demonstrate that they are not purely focused on profiteering during a difficult time for mortgage borrowers.
“When interest rate rises are announced, we are flooded with product withdrawal emails from lenders.
“But when there is positive news, such as the June inflation figure, you could hear a pin drop. I would really like to see more lenders follow the same approach. Will that happen?
“I think it will take more before we see significant reductions across the market. I hope they prove me wrong.”
Ashley Thomas, director at Magni Finance:
“It’s refreshing to see rate reductions. HSBC has followed Accord and we fully expect more lenders to follow suit.
“I wouldn’t be surprised to see another five lenders reduce their rates this week.
“However, we need to see a much lower drop in inflation for rates to reduce significantly.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“It’s encouraging to see HSBC, one of the UK’s largest mortgage lenders, reduce their rates, especially following the positive inflation news last week.
“Hopefully, this now sees the rest of the marketplace follow suit and give much-needed relief to mortgage borrowers across the UK.”
Graham Cox, founder at SelfEmployedMortgageHub.com:
“With UK swap rates drifting lower, and the outlook for inflation suddenly looking much brighter, it’s no surprise to see lenders breaking ranks and cutting rates.
“This is great news for mortgage borrowers and it’s likely we’ll see other high street lenders reducing their fixed rate deals in response.”
Kylie-Ann Gatecliffe, director at KAG Financial:
“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.
“This is fantastic news for homeowners, after months of emails from lenders only sending rates one way.
“To finally have some positive news is great for borrowers. 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.”
Rob Gill, managing director at Altura Mortgage Finance:
“While smaller lenders started cutting rates last week, we’re now seeing larger lenders such as Accord, the intermediary arm of Yorkshire Building Society, and HSBC join the fray with significant rate cuts.
“This follows the above-expected fall in inflation last week, which has seen money market rates drop significantly.
“With inflation improving, the cost of funds falling and two major lenders pricing accordingly, it’s likely other lenders will follow suit before too long.”
John Choong, equity research analyst at Investing Reviews:
“The reduction of fixed-rate mortgages from HSBC should serve as some relief for borrowers. However, further cuts will be heavily dependent on the next few CPI inflation prints.
“Borrowers shouldn’t be so quick to call victory just yet as there are still a number of challenging obstacles for inflation to navigate before it can achieve its 2% target.
“The core elements of CPI, such as services, barely budged in June.
“If this continues to prove sticky, it could end up dimming the light at the end of the tunnel. As such, borrowers aren’t out of the woods quite yet, and further evidence of cooling inflation will be required before confidence can be restored in an already fragile housing market.”
Paul Welch, founder and CEO at Large Mortgage Loans:
“In a market starved for new mortgage business, expect other high street lenders to match HSBC’s recent rate cuts. Competing on price is the game now.”
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