HSBC announced cuts beginning Thursday on its residential mortgage interest rates, with several dropping below 5% for the first time since April 2023
U.K. mortgage rates are dropping as markets expect the Bank of England will start cutting interest rates toward the middle of the year — but uncertainty is likely to continue to dent buyer confidence.
HSBC announced cuts beginning Thursday on its residential mortgage interest rates, with several dropping below 5% for the first time since April 2023. The biggest drop was to its 10-year fixed-rate remortgage deals, one of which is down from 4.99% to 3.99%.
Reductions have also been announced by Britain’s biggest mortgage lender, Halifax, including to its two-year fixed-rate remortgage which declined from 5.64% to 4.81% this week.
It marks a sharp reduction from last summer when the average rate of a two-year fixed deal reached a 15-year high of 6.66%.
Martin Stewart, director of London Money, said there was a degree of positivity in the market going into 2024 that was absent this time last year, led by a rise in lender confidence.
A year ago, “no one wanted to be the cheapest on the market. That has now turned 180 degrees, competition has returned and now the banks are competing with each other once again,” he added.
The average two-year fixed-rate residential mortgage rate in the U.K. was 5.87% as of January 4, as per research published daily by Moneyfacts, down from 6.29% two months back. The average five-year fixed rate was down to 5.53% from 5.87%.
There are also more residential and BTL mortgage products available, Moneyfacts found.
The mortgage rate reductions come amid wider signs of resilience in the U.K. housing market.
House prices dropped 1.8% in the year to December, as per lender Nationwide, defying calls of a slump of up to 10% through the course of 2023.