Barclays, HSBC to slash fixed-rate mortgage offers

Barclays and HSBC are planning significant reductions in their fixed-rate mortgage offerings, aiming to provide attractive deals for prospective homebuyers and current homeowners alike. This move is expected to lower borrowing costs and increase affordability in the housing market. Both banks' initiatives are likely to attract attention from individuals seeking stable and competitive mortgage options, potentially influencing market trends in mortgage rates and consumer choices.

Analysts suggest that reductions of as much as 0.31 percentage points could ignite a 'summer of savings,' prompting other lenders to adopt similar measures.

Boston Brand Media brings you the latest news - HSBC and Barclays are cutting their fixed mortgage rates, potentially kicking off a "summer of savings" for homebuyers and those refinancing, according to some brokers. Barclays has lowered rates by more than 0.25 percentage points in some cases starting Tuesday, prompting HSBC to announce similar reductions across its home loan offerings effective Wednesday.

Although new home loan rates have been relatively steady recently, some deals have seen price increases. Improved money market swap rates have encouraged these rate cuts from two major mortgage lenders, with others expected to follow suit.

First-time buyers' incomes have not kept pace with rising house prices and interest rates. Mortgage costs have fluctuated significantly in the past two years, influenced by factors like the fallout from Liz Truss’s September 2022 mini-budget, which pushed some fixed-rate deals above 6%. Earlier this year, rates dropped sharply only to begin rising again later.

Barclays has introduced several rate reductions, such as lowering a two-year fixed rate from 5.76% to 5.48% for those with a deposit or equity stake of 10% or more. Another two-year fixed deal dropped from 5.13% to 4.88%.

Details of HSBC's rate changes were not available at the time of writing. MPowered Mortgages has also reduced rates by up to 0.15 percentage points on its fixed deals this week.

Ranald Mitchell from Charwin Private Clients described HSBC's rate cuts as the start of a "summer of savings" for mortgage borrowers, following Barclays’ lead. He noted that while homeowners may see relief, broader market changes are needed to fully stimulate the housing market.

Andrew Montlake of Coreco suggested that with inflation falling and swap rates easing, these rate cuts could ignite renewed competition among lenders.

Boston Brand Media also found that the Bank of England maintained its interest rates at 5.25% at its recent policy meeting but indicated a possible future cut. Economists believe this decision could pave the way for a rate reduction in August.

Nicholas Mendes from John Charcol highlighted the potential for reductions in mortgage rates, noting recent trends toward increases. He anticipated that HSBC’s latest rate adjustments would further energize the market.

Financial data provider Moneyfacts reported that as of Tuesday, the average rate for a new two-year fixed-rate deal was 5.96%, while a typical five-year fixed-rate deal averaged 5.53%. These averages have remained stable in recent days.

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Source: theguardian‍