HSBC is set to introduce rate cuts on selected 2-, 3- and 5-year fixed rate products as of tomorrow, Wednesday the 9th of August.
The lender will also be reintroducing cashback incentives across a selection of first-time buyers and home mover rates.
In light of this major lender’s announcement, industry experts have been sharing their thoughts on how this may impact the market going forward.
Reaction:
Riz Malik, founder and director at R3 Mortgages:
“HSBC’s latest move is admirable, and other major banks on the high street are sure to follow suit.
“TSB has also announced reductions on some of their fixed rates this morning, some by up to 0.4%.
“There is speculation that we are nearing the peak of interest rates rises, and the next inflation statistics on the 16th may provide further support for this view.
“Many lenders repriced fixed rate products downwards in the week before the base rate decision. Hopefully, this trend will continue.”
Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial:
“HSBC feel that gilt rates won’t increase much further than current levels, and that means there will probably be only one further 0.25% rate rise by the central banks.
“However, predicting what Andrew Bailey is going to do is like playing Russian roulette.
“If he continues to hike rates more than anticipated there could, once again, be an upwards spiral in rates.
“Most people think that we are in for a period of calm from now on, with rates set to fall back in the winter.”
Jamie Lennox, director at Dimora Mortgages:
“It’s great to see HSBC leading the way with their second rate reduction in as many weeks.
“Hopefully this will spark a rocket within the other big six lenders who were fast to increase rates but seem to be dragging their heels on bringing them back down again.
“The next inflation data is going to be key to this downward trend continuing and with the energy price cap reducing in July we can pray there is some solid downward movement that will instil more confidence back into the market.
“However, we still walk a fine tight rope as if inflation doesn’t meet the expected targets, we could quickly see rates rebound back upwards.”
Austyn Johnson, founder at Mortgages For Actors:
“The mortgage market is changing with lenders trying to keep rates as low as possible.
“They are making fine cuts as soon as they can to stay competitive.
“The only issue with this is that the profit for them just drops. In turn then, they are raising fees to make their profit up front.
“People hate paying fees, but if you look at the difference between a high rate/low fee and a low rate/high fee, its usually pretty much the same.”
Michelle Lawson, director- mortgage & protection adviser at Lawson Financial Ltd:
“This is great news and a trend which now appears to be on course, for now at least.
“The good news is that Swap rates have reduced by circa 0.5% from this time last month so confidence is returning.
“The next big days are 15th August for the unemployment figures to be announced and 16th August for the latest inflation figures.
“This may then determine the trajectory further and potential for the next Bank of England decision due on 21st September.
“Lenders appear to already be pricing in a further 0.25% rise but the rates are coming down across the board, which is much needed at last.”
Anil Mistry, director and Mortgage Broker at RNR Mortgage Solutions:
“Due to the recent declines observed in swap rates since the most recent rate increase by the Bank of England, it is reasonable to anticipate further potential reductions in mortgage rates by other lenders.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“‘Everyday I’m shuffling’ springs to mind when I have seen rate reductions in recent days.
“Until we see consistent inflation reductions, will we then see consistent interest rate declines? It is no surprise lenders introducing Cashback deals to prop up profits if they have yet to play their cards on rate reductions.
“It’s early days, but competitive pricing for mainstream lenders is good to see, and long may it continue.
“We just need to see more of it in the buy-to-let arena, which is suffering. The next few months of inflation figures will determine what trends we see in mortgage pricing. We are not out of the woods yet.”
Graham Cox, founder at SelfEmployedMortgageHub.com:
“Lenders like HSBS are now starting to reverse the large increases in mortgage rates we saw from late May onwards.
“As the inflationary outlook has improved, swap rates have fallen.
“And thanks to higher savings rates, high street lenders are also increasing their deposit funding, which can often be cheaper.
“As long as inflation continues falling during the remainder of 2023, there’s every chance mortgage rates will follow suit over the coming months.”
Peter Stamford, director and lead adviser at Moor Mortgages:
“HSBC has once again taken an early position with this morning’s fixed rates discounting, closely followed by a similar announcement from TSB.
“It appears the market is bracing for another phase of discounting, potentially taking us back to the levels seen at the end of Spring.
“This is desperately needed in the first-time buyer market.”
Elliott Culley, director at Switch Mortgage Finance:
“It was good to see some more reductions in rates from big lenders today.
“If your current mortgage is coming up for renewal, this might be the best time to get a rate secured between now and the end of the year.
“If we have learnt anything over the past year and a half, it’s that the current market is unpredictable.”
Rohit Kohli, operations director at The Mortgage Stop:
“This is excellent news from HSBC and it’s great to see a major lender reduce rates.
“With TSB also announcing reductions, this will be a welcome relief to homeowners as a little of the pressure is taken out of the market.
“Hopefully, this will lead to a bit more competition between lenders as we can see that lenders have an appetite to lend and this can only be positive for first-time buyers and homeowners alike.
“However, all eyes are on the 16th for August’s inflation figures. If they stay on the same downward trajectory, it will take the pressure off the Bank of England to keep increasing rates and perhaps hold steady for a few months.
“I’m not expecting any reductions in interest rates until inflation is much closer to the bank’s target.”
Ben Tadd, director at Lucra Mortgages:
“HSBC’s announcement this morning to cut their residential rates further will put more pressure on the shoulders of the other five big lenders to follow suit and grab their market share.
“If the recent few weeks are anything to go by, this may well create a further domino effect on rates with the rest of the market to follow once again, with the mini rate war picking up some further pace.
“With lenders now pricing in future anticipated base rate rises earlier than ever to their product pricing, the next inflation data release, due on the 16th of August, is crucial.
“Let’s hope the inflation data doesn’t scupper the direction of travel that rates are currently on.”
