HSBC Becomes the First High Street Lender to Cut Mortgage Rates

In a bold and strategic move, HSBC has become the first high street lender to reduce its mortgage rates. The bank’s decision encompasses various deals, including two, three, and five-year fixed fee saver, fixed standard, and premier exclusive products, all of which will experience rate cuts starting today.

Impact on Tracker Standard Products

HSBC’s mortgage rate reductions also extend to its tracker standard products, especially those with up to 90 per cent loan-to-values on the lender’s residential first-time buyer and home mover products, residential mortgage, and international residential purchases ranges. This is expected to provide relief to a wide range of borrowers looking for affordable mortgage options.

Focused on Supporting Customers

In a statement released by HSBC, the bank expressed its commitment to supporting customers in the current economic environment. The decision to cut mortgage rates across its residential mortgage range is a testament to this dedication. Additionally, HSBC is reintroducing a cashback option of £300 on several deals, further enhancing the value proposition for potential homeowners.

Competitor Response: Accord Mortgages and Yorkshire Building Society

Following HSBC’s announcement, competitor Accord Mortgages has also declared a reduction of 0.45 per cent on its residential fixed rates starting tomorrow. This competitive response signifies the beginning of a potential rate war in the mortgage market.

Moreover, Yorkshire Building Society’s intermediary-only subsidiary is enabling clients to borrow more using its LTI feature, providing additional flexibility for borrowers in these challenging times.

The Impact on the Market

Industry experts have varying opinions on the implications of these rate cuts. Justin Moy, managing director at EHF Mortgages, believes that other lenders will likely follow suit, but the reductions may be modest and short-term, considering the impending base rate increases expected in the coming weeks.

On the other hand, Kylie-Ann Gatecliffe, director at KAG Financial, warns that this could be the start of another rate war, similar to what was witnessed earlier in the year after the mini-budget disaster. However, she also acknowledges that gradual reductions, while people are concerned about mortgage payments, are a step in the right direction.

A Response to Inflation and Government Initiatives

Recent months have seen a rapid increase in mortgage rates due to the Bank of England’s ongoing struggle with persistently high inflation in Britain. Traders have even predicted that the Bank may need to increase the base rate to 6.25 per cent after the consumer price index dropped nearly one point to 7.9 per cent.

In light of these challenges, Chancellor Jeremy Hunt introduced measures to assist struggling homeowners, including a 12-month minimum before repossessing homes. He met with high street bank lenders to work out a support package aimed at providing stability and security to homeowners facing financial difficulties.

In conclusion, HSBC’s decision to slash mortgage deal costs is a significant development in the mortgage market. As the first high street lender to take this step, it sets a precedent for others to follow suit. This move is expected to bring relief to homeowners and potential buyers alike, and it may mark the beginning of a competitive rate war among lenders. In these uncertain times, the government’s efforts to support struggling homeowners are crucial in maintaining stability in the housing market.

More 40-Year Fixed-Rate Mortgage Deals Considered by UK Government to Assist First-Time Buyers

In an effort to aid first-time buyers in Britain who are unable to afford short-term fixed-rate mortgages, the government is contemplating a new plan that involves offering more 40-year mortgage deals. As inflation begins to decrease at a faster rate than expected, borrowers are still burdened with significantly high mortgage rates compared to a year ago.

To address this issue, the Treasury has engaged in discussions with Members of Parliament, the Bank of England, and lenders who are currently offering 40-year mortgage deals. These deals provide borrowers with the advantage of a single fixed interest rate for the entire duration of the loan. Such offers are likely to be more cost-effective than other mortgage deals, making it easier for first-time buyers to enter the property market while also providing protection against potential future interest rate hikes.

The talks have explored the possibility of implementing regulatory changes that would facilitate more firms to offer these 40-year deals. Some of the proposed changes include reducing capital requirements and easing loan-to-income limits, which would enable a broader pool of borrowers to access these mortgage options.

Currently, potential buyers must demonstrate their ability to afford the lender’s standard variable rate, which averages at 7.67 per cent, along with an additional 1 percentage point. The introduction of extended mortgage terms could alleviate this financial burden for many aspiring homeowners.

During the discussions, Andrew Griffith, the economic secretary to the Treasury, expressed significant interest in the concept of 40-year mortgage deals. He highlighted that such arrangements are more commonplace in countries like the Netherlands and Denmark, where they have already proven beneficial in helping first-time buyers secure their own properties. One of the advantages of a fully fixed mortgage term is that it reduces the relevance of affordability stress tests since there is no risk of payment increases over time.

While the proposed plan has garnered support from many quarters, some mortgage brokers have voiced criticism. One of the critics referred to it as a “terrible idea” and dismissed it as a “knee-jerk reaction to a transient problem.”

The Benefits of 40-Year Mortgage Deals

Offering 40-year mortgage deals to first-time buyers can bring several advantages to both borrowers and the housing market as a whole.

Increased Affordability

By extending the mortgage term to 40 years, monthly repayments can be significantly reduced. This allows buyers with limited budgets to enter the property market and fulfil their dream of homeownership.

Stable Interest Rates

The fixed interest rate throughout the entire term of the mortgage provides borrowers with a sense of security and stability. They can plan their finances better, knowing that their mortgage payments will remain unchanged, irrespective of any fluctuations in the broader economy.

Encouraging Economic Growth

A more accessible property market stimulates economic growth by increasing housing demand, leading to higher construction activity and more employment opportunities in the property sector.

Addressing Criticisms

Despite the potential benefits, some critics argue against the implementation of 40-year mortgage deals.

Long-Term Interest Payments

Critics contend that longer mortgage terms result in higher interest payments over time. While this is true to some extent, it is essential to consider that the increased affordability offered by longer terms outweighs the higher interest costs for many first-time buyers.

Impact on Housing Prices

Some experts worry that making mortgages more attainable might lead to a surge in housing prices, ultimately offsetting the advantages of extended mortgage terms. Addressing this concern would require a comprehensive approach that involves carefully monitoring the housing market and employing additional measures if necessary.


In conclusion, the proposal to introduce more 40-year mortgage deals in the UK holds the potential to support first-time buyers in their journey towards homeownership. By providing enhanced affordability and stability, these mortgage options can serve as a stepping stone for aspiring homeowners. While critics have expressed concerns, a well-regulated and monitored implementation can help mitigate any negative impacts. As the government continues to explore these possibilities, it remains crucial to strike a balance between accessibility and long-term economic sustainability.

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