HSBC will cut rates on selected two-, three- and five-year fixed-rate residential loans for new borrowers from tomorrow (9 August).
The bank says it will update the market on the scale of its reductions on Wednesday.
An HSBC spokesperson says: “The changes are planned across the residential new business range, with added cashback incentives for house purchase and first-time buyers.”
The move comes as Nationwide Building Society and TSB also plan to cut home loan rates in 24 hours.
TSB will cut rates on selected residential five-year fixes at up to 85% loan to value by up to 40 basis points, with its cheapest product starting at 5.44%, with a £995 fee.
The announcements follow the Bank of England’s base rate rise by 25bps to 5.25% last week, its 14th consecutive rise and the highest level for 15 years.
The central bank is battling inflation, which dropped to 7.9% in the year to June from 8.7%, but still remain almost four times higher than its 2% target.
However, lenders say swap rates have fallen from their early July peak, allowing them to cut rates.
Lawson Financial director, mortgage & protection adviser Michelle Lawson says: “The good news is that Swap rates have reduced by circa 5bps from this time last month so confidence is returning.
“The next big days are 15 August for the unemployment figures to be announced and 16 August for the latest inflation figures. This may then determine the trajectory further and potential for the next Bank of England decision due on 21 September.
“Lenders appear to already be pricing in a further 25bps rise but the rates are coming down across the board, which is much needed at last.”
Mather and Murray Financial independent financial advisor Samuel Mather-Holgate adds: “HSBC feel that gilt rates won’t increase much further than current levels, and that means there will probably be only one further 25bps rate rise by the central banks.
“However, predicting what [Bank of England governor] Andrew Bailey is going to do is like playing Russian roulette.
“If he continues to hike rates more than anticipated there could, once again, be an upwards spiral in rates.
“Most people think that we are in for a period of calm from now on, with rates set to fall back in the winter.”
