HSBC Holdings PLC (LSE:HSBA) has become the UK’s first major lender to cut mortgage rates, after recent spikes caused by stubborn base interest.
Some 16 deals will see rates reduced from Wednesday, the bank said, including two and five-year fixes which will be cut by up to 0.2%, The Telegraph reported.
Subsiding inflation in June has lifted hopes that any future base rate hikes by the Bank of England will be less extreme than last month’s fifty basis point rise to 5.0%.
Given the move had prompted a flurry of mortgage rate hikes by banks, anticipations of less drastic measures to stem UK spending in the future now appear to be feeding through.
HSBC’s two-year fix for those re-mortgaging is expected to fall from 6.24% to 6.14% as a result, while a five-year rate will be cut more aggressively from 5.84% to 5.64%.
Analysts tip the move could prompt competition among other major lenders to cut rates, with many smaller banks already offering cheaper deals.
“They are generally competitive in the market and that will force others to think about whether they need to follow suit,” L&C Mortgages broker David Hollingworth said.