HSBC Pioneers Mortgage Rate Cut Amid Rate War Fears
In a bold move, HSBC has become the first major UK lender to slash mortgage rates this year, sparking concerns that a price war could engulf the industry in the coming months.
The bank's decision to reduce its residential and landlord buy-to-let mortgage rates across various products takes effect on Monday. The cut comes after the Bank of England base rate was lowered to 3.75% in December, setting off expectations for further interest rate reductions this year.
Mortgage brokers are hailing the move as a good news story for borrowers, with many predicting that rivals will follow suit to remain competitive. "Many of the other big lenders will feel the need to also cut to remain competitive, which could result in a rate war," said David Stirling, an independent financial adviser.
With approximately 1.8 million homeowners expected to refinance mortgages this year, the reduced rates could make it easier for them to take advantage of more affordable borrowing options. The average two-year fixed residential mortgage rate stands at 4.83%, while the average two-year buy-to-let residential mortgage rate is 4.7%.
Stirling expects that sub-3.5% deals may emerge before the spring, and city economists are predicting two further base rate cuts this year. However, some experts argue that interest rates will become increasingly uncertain, making it harder for lenders to predict future moves.
The recent trade body UK Finance predicted a fall in demand for new home loans in 2026, but remortgaging activity is expected to rise. The cheapest fixed-rate mortgages are already priced below the current bank rate, reflecting expectations of further interest rate cuts.
Nationwide's latest data has revealed that house prices unexpectedly fell in December, marking the weakest annual growth in over 18 months. With HSBC leading the charge on reduced mortgage rates, it remains to be seen how other lenders will respond and whether a full-blown rate war erupts in the coming months.
In a bold move, HSBC has become the first major UK lender to slash mortgage rates this year, sparking concerns that a price war could engulf the industry in the coming months.
The bank's decision to reduce its residential and landlord buy-to-let mortgage rates across various products takes effect on Monday. The cut comes after the Bank of England base rate was lowered to 3.75% in December, setting off expectations for further interest rate reductions this year.
Mortgage brokers are hailing the move as a good news story for borrowers, with many predicting that rivals will follow suit to remain competitive. "Many of the other big lenders will feel the need to also cut to remain competitive, which could result in a rate war," said David Stirling, an independent financial adviser.
With approximately 1.8 million homeowners expected to refinance mortgages this year, the reduced rates could make it easier for them to take advantage of more affordable borrowing options. The average two-year fixed residential mortgage rate stands at 4.83%, while the average two-year buy-to-let residential mortgage rate is 4.7%.
Stirling expects that sub-3.5% deals may emerge before the spring, and city economists are predicting two further base rate cuts this year. However, some experts argue that interest rates will become increasingly uncertain, making it harder for lenders to predict future moves.
The recent trade body UK Finance predicted a fall in demand for new home loans in 2026, but remortgaging activity is expected to rise. The cheapest fixed-rate mortgages are already priced below the current bank rate, reflecting expectations of further interest rate cuts.
Nationwide's latest data has revealed that house prices unexpectedly fell in December, marking the weakest annual growth in over 18 months. With HSBC leading the charge on reduced mortgage rates, it remains to be seen how other lenders will respond and whether a full-blown rate war erupts in the coming months.
Mortgage rates just got crazy!!! Like who needs stability when you can save £500 a year on your mortgage? 
HSBC is setting the bar low, expecting others to follow suit. I'm all for borrowers getting a sweet deal, but what about savers who are stuck with low interest rates on their savings?! 
It's a bit of a double-edged sword, innit? The rate war might bring more affordable mortgages, but it could also lead to inflation and market chaos. Fingers crossed they can find that sweet spot! 
and potentially lead to more instability in the market. what's next? everyone just cutting rates until it becomes impossible to keep up 
They say they use this crazy rich pork broth that's supposed to give you wings or something lol anyway back to mortgages... yeah, I get why everyone's getting all excited about these rate cuts but at the end of the day aren't we just playing a game of musical chairs where someone's always gonna be left holding the bag? 
just got word that HSBC is slashing mortgage rates 
gonna keep an eye on this one 
! Just wait and see how this all plays out, I'm not holding my breath 
.
so lets see how the rest of them react but i reckon hesbc just trying to stay competitive now
this is crazy! Everyone's gonna start cutting rates left & right... sub-3.5% deals might actually happen 
If everyone starts cutting rates left and right, it’s gonna make it super easy for people to refinance their mortgages, which could lead to some huge financial changes for a lot of folks. I mean, the stats are already saying that house prices have been cooling down lately, so if mortgage rates drop even further, we might see even more homes on the market 
david stirringl says that others will follow suit and it might even lead to a price war, but idk, i think that's kinda cool 
like, more options for us homeowners, yeah! 
. Nationwide just dropped house prices, which is already causing shockwaves... will we see more lenders following suit? 
and with 1.8 million ppl refinance their mortgages this yr, it's like a sweet spot for lenders 2 make some cash 
. It's interesting that HSBC just dropped their mortgage rates, maybe other banks will follow suit? I've been hearing rumors of sub-3.5% deals popping up soon 
but what if it leads to a price war? that'd be bad for borrowers who need affordable loans 
anyway, at least we're living in an era where competition is actually good for consumers 
. but i guess that's not how it works. and now with HSBC leading the charge on reduced mortgage rates, it's like a domino effect is gonna happen.
. I was walking through this quaint little village and stumbled upon an old antique shop. The owner, this lovely old lady, had the most incredible collection of vintage tea sets 
. I ended up buying one for my sister's birthday gift. Anyway, back to mortgage rates... I don't know how lenders can predict these interest rate fluctuations anymore 
.