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A fresh round of mortgage rate cuts is getting under way as the new year starts, which could remove some of the “sting” for those who are coming to the end of their current fixed deal, experts have said.
HSBC UK is among those making cuts to its fixed rates in a further boost for mortgage borrowers.
The bank’s new rates are effective from Thursday, including a five-year rate of 3.94% for remortgage customers borrowing up to 60% of the property value.
HSBC’s two-year fixed rate for remortgages will dip below the 4.50% threshold, with rates hitting 4.49%, again for those with at least 40% equity in their home.
David Hollingworth, associate director at L&C Mortgages, said: “These cuts are just the latest salvo in an increasingly fast-moving market.
“These rates are offering some of the lowest rates since the spike in rates last summer. Although borrowers coming to the end of their current fixed-rate this year will still be looking at a rise in payments, these new lower rates will at least take some of the sting out of the inevitable rise.
“HSBC’s move is notable in that its rates are on offer to those borrowers looking to remortgage, a departure from the recent trend of pricing favouring homemovers.
“With large numbers of borrowers anxiously approaching the expiry of a fix taken during the ultra-low rate period, this is a welcome move and hopefully a signal for more lenders to follow suit, improving options for those facing payment shock.
“These cuts follow hot on the heels of new year improvements by Halifax and others will be bound to follow suit. We thought the new year would start with a bang and that’s proving to be the case.”
According to financial information website Moneyfacts, across all deposit sizes, the average two-year fixed homeowner mortgage rate on the market is 5.92%, down from 5.93% on Tuesday.
The average five-year fixed homeowner mortgage rate is 5.53%, down from an average rate of 5.54% on Tuesday.
An HSBC UK spokesperson said: “Our new fixed mortgage rates will see significant cuts across the board which will be a welcomed move.
“Specifically, for customers wishing to remortgage, our rates will start from 3.94% for a five-year deal at 60% LTV (loan-to-value) with a £999 fee.”
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