HSBC Holdings PLC (LSE:HSBA) has cut mortgage rates to the lowest level among big bank rivals, prompting speculation for a fall in typical interest to around 3.5% by the year-end.
Premier account holders at the lender can now access five-year fixes at 3.81% following HSBC’s latest cut, which comes after a string of reductions among rivals.
Those without such an account face higher rates, of 4.83% for the same term, though this is also below the current market average.
According to Moneyfacts, this sits at 5.25% for the average five-year fixed mortgage in the UK, with typical two-year deals priced at 5.62%.
HSBC’s follows cuts already made by Lloyds Banking Group PLC (LSE:LLOY)’s Halifax, TSB Banking Group (LSE:TSB) and Virgin Money UK PLC (LSE:VMUK) this week, while NatWest Group PLC (LSE:NWG)’s 3.83% five-year fix marks the closest comparable offer.
While these are lower, many standard deals include upfront fees, with NatWest charging £1,495 on the five-year offer.
Adrian Anderson, director at brokerage Anderson Harris, noted continued fast-paced cuts could take average rates on five-year fixes to around 3.5% by late this year.
Two-year fixed rates could move below the 4% mark in the meantime, he added.
This follows the Bank of England’s first cut to base interest earlier this month, which is expected to be followed by further reductions over the coming months, leaving lenders locked in competition to attract prospective buyers as the outlook for the property sector improves.