"HSBC often lead the way with reductions so we should expect even more lenders to follow and soon see some lenders offering residential deals starting with a 4"
A mortgage ‘tug of war’ is unfolding between lenders, brokers have said, as HSBC is the latest lender to announce rate cuts today across its residential and buy-to-let range.
Among the rate cuts are two and five-year fixes for existing residential customers switching or borrowing more, residential first-time buyer, home mover and remortgage two, three and five-year fixed rates between 60-90% LTV, and international residential products up to 75% LTV.
Across HSBC's buy-to-let range, existing customer, purchase and remortgage rates between 60-75% LTV will also reduce from Monday.
The lender is also introducing cashback offerings with an incentive of £350 across three-year fixed standard and fee-free products within its residential first-time buyer and home mover ranges.
Newspage asked brokers for their views on the latest round of rate cuts.
Jamie Lennox, director at Dimora Mortgages, said: “The mortgage tug of war continues between lenders, as they battle it out for market share in a barren market. HSBC often lead the way with reductions so we should expect even more lenders to follow and soon see some lenders offering residential deals starting with a 4 on a five-year fixed rate. If we see another positive set of inflation data this month, these reductions could keep coming thick and fast.”
Charles Breen, director of Montgomery Financial, said it is less a tug of war than an all-out arms race: “These reductions are the latest moves in what increasingly resembles an all-out arms race between mortgage lenders. They are striving to compensate for the business they have lost. It is looking ever more likely that we are drawing nearer to the point where fixed rates may begin with a 4, potentially sparking a resurgence in the property market as potential buyers rejoin the fray. Following a summer filled with pessimism, it appears that, as we transition into autumn, we may have reached a turning point.”
Stephen Perkins, managing director at Yellow Brick Mortgages, added: “Rates just continue falling with the cycles between reductions speeding up. What were weekly rate reviews are now happening every other day. While this is indicative of market confidence that the base rate is near its peak, it’s also a clear indication that lenders are fishing for market share in a heavily drought-shrunk pool of borrowers. With committed lending targets to be hit by year end, expect the rate fight to continue to escalate.”
