HSBC is cutting residential and buy-to-let rates across the board from Monday (February 24).
The bank revealed it is cutting rates, although exact rates are not yet known.
A spokesperson said: “We are firmly focused on helping people achieve their home ownership goals, from remortgaging their existing property to customers moving on to or up the property ladder.
“There are a number of factors taken into account when setting mortgage rates and following a review, we are pleased to announce that our residential and buy-to-let mortgage rates for new and existing customers are coming down from Monday.”
This comes as last week it was reported that inflation rose by half a percentage point in January to 3 per cent as inflationary pressures “heat up”.
The Office for National Statistics revealed the consumer price index rose by 3 per cent in the 12 months to January 2025, up from 2.5 per cent the month prior.
On a monthly basis, CPI fell by 0.1 per cent in January 2025, compared with a 0.6 per cent fall in December.
Since the news, the market has been split with some lenders upping their rates while others are cutting them.
Daniel Hobbs, chief executive officer at New Leaf Distribution said: “It’s been another volatile week in the mortgage market following the higher than expected inflation number.
“However, the fact that big lenders are continuing to shave their rates may imply they believe base rate cuts are coming, even if they don’t come at the next meeting of the Bank of England’s Monetary Policy Committee.”
Likewise, Justin Moy, managing director at EHF Mortgages said it was great to see the bank cut mortgage rates, especially with swap rates, which fixed rate mortgages are priced off, creeping up this week on the back of the worsening inflation figures.
Moy said: “This suggests lenders continue to believe the long-term plan will involve base rate cuts in 2025.
“As ever, the journey to these improvements will be fraught with bumps and obstacles along the way. Borrowers have to be proactive with their broker to capture the best options before their renewal is due.”
A boost of confidence
Earlier this month, the Bank of England cut rates by 25 basis points to 4.5 per cent.
In its first meeting of 2025, the bank’s Monetary Policy Committee voted seven to two in favour of the drop from 4.75 per cent.
The committee said: “There has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations.”
However, following this, inflation rose.
Amid the volatility, David Stirling, director at Mint Mortgages & Protection, said the bank has given people something to look forward to.
He said it is always a positive sign when rates are heading in the right direction for borrowers.
“Booking rates early is a smart move, as it often allows borrowers to take advantage of even lower rates if they become available before their completion,” he said.
“Any downward momentum is certainly a win for those looking to borrow.”
Additionally, Simon Bridgland, director at Release Freedom, described HSBC’s decision as “a sure sign of further confidence”.
“Brokers and borrowers are hoping for some further bank base rate cuts throughout this year and it seems as if HSBC believes it could happen.
“Confidence is a major driver of the property market and if lenders hold their nerve and give the consumer what they are asking for it could snowball.
“I would expect to see further fixed rate cuts announced over the next few days from other major banks.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser
sonia.rach@ft.com
