Mortgages: HSBC becomes the first major lender to cut interest rates

[ad_1]

h

SBC has become the first major bank to cut mortgage rates, in the clearest sign yet that the subprime mortgage chaos appears to be coming to an end.

The banking giant intends to lower its prices across the range of residential products it offers. Right now, a five-year deal with 90% LTV is priced at 6.04%.

HSBC did not disclose the size of the reductions that will take effect tomorrow.

The repricing comes on the heels of last week’s long-awaited good news about the cost-of-living crisis, when inflation fell more quickly than expected to 7.9%.

This prompted Citi traders to downgrade their expectations of how far the Bank of England will need to raise interest rates over the next year. The market now expects rates to peak at 5.75%, much lower than the peak of 6.75% expected earlier this month.

Read more

Now, those hopes of higher interest rates are starting to seep into the mortgage market, with HSBC joining specialist lender Accord in cutting rates after months of increases.

“To see the first High Street lenders ‘flicker’ and reduce products across their residential products is great news,” said Justin Moye, managing director at EHF Mortgages.

“There is a lot of pressure on others to follow now, as apps will follow the cheaper rates. Maybe Santander can reverse its decision to increase interest rates and get back in line as well?”

“We are still right to be nervous, though, given the imminent increases in the underlying rate on the horizon and the fact that a lot of things can change the mood of the markets in a short period of time. Still, that was a welcome email in my inbox this morning.”

Jamie Lennox, director of Dimora Mortgages, noted that HSBC’s rates are generally lower than those of other large lenders, meaning its competitors are likely to follow suit.

But he also warned that prices are still much higher than they have been in years.

“Mortgage holders will still need to be aware that the rates quoted will likely be more expensive than they have been used to in recent years,” he said.

[ad_2]