HSBC has become the first high street lender to announce it will be reducing rates on a number of its fixed-rate products, after better than expected inflation data.
According to HSBC's website, currently a five-year deal with a 90 per cent loan-to-value has a rate of 6.04 per cent.
This news was welcomed by the industry with Yellow Brick Mortgages managing director, Stephen Perkins describing it as "encouraging".
EHF Mortgages managing director, Justin Moy, shared this sentiment, stating that the news was a "welcome email in my inbox this morning".
Looking to the future, Moy stated there is now plenty of pressure on other lenders to follow as applications will follow cheaper rates.
Providing some explanation for the reduction, SelfEmployedMortgageHub.com founder, Graham Cox, said: “With UK swap rates drifting lower, and the outlook for inflation suddenly looking much brighter, it’s no surprise to see lenders breaking ranks and cutting rates.”
There is now hope that mortgage rates might begin to fall.
Magni Finance director, Ashley Thomas, said: "I wouldn't be surprised to see another five lenders reduce their rates this week." But she warned there would need to be a much lower drop in inflation for rates to “reduce significantly”.
KAG Financial director, Kylie-Ann Gatecliffe said this predicted wave of reductions could be the start of another "rate war", similar to the one that occurred early this year after the "disaster that was the mini-Budget".
She added that the rates "may not fall rapidly", as this could also shake the market, but she described a reduction at a time when people are worried about mortgage payments as "a step in the right direction”.
Reduced Accord-ingly
HSBC's news followed similar rate reductions from Accord Mortgages, which recently announced a drop in its residential fixed rates by as much as 0.45 percentage points.
Lucra Mortgages director, Ben Tadd, said Accord reducing their residential fixed rates "is hopefully the catalyst for more high street lenders to follow suit".
Meanwhile, R3 Mortgages founder and director, Riz Malik, said a decrease in rates is "always appreciated", and "recent reductions by HSBC and Accord certainly helps today's battered borrowers".
However, Mather Murray Financial independent financial adviser, Samuel Mather-Holgate warned that, while this could be the start of some "great news" for homeowners, it is dependent on the Bank of England's next move.
"If the bank keeps rates on hold, further reductions will come. This will signal they have reached their peak and the only direction from here is down, when the inflation print allows," he explained.
“Those who are really struggling should welcome this news excitedly.”
tom.dunstan@ft.com
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