The mortgage lender’s repricing, which comes into effect on Friday (17 April), has been described by one industry expert as ‘the clearest sign yet’ that lender confidence is returning.
Indeed, it marks reversal in the trend we have seen over the last six weeks of rising mortgage prices, with rates soaring by over 1% on average since the beginning of March.
The hikes were caused by the war in Iran which sent swap rates – used by lenders to set their pricing – rising. It has meant many borrowers renewing mortgage deals or buying homes face a steep hike in how much they would repay.
Now some of the bigger lenders are beginning to reduce prices again, does this offer a glimmer of hope to borrowers planning to take out a mortgage in the coming months?
Nicholas Mendes, mortgage technical manager at John Charcol, said it was indeed good news. “HSBC is the latest lender joining TSB and Santander with rate reductions this week is another positive step, and probably the clearest sign yet that lender confidence is starting to come back,” he said.
“What gives this move a bit more weight is that HSBC is one of the major high street lenders. When a lender of that size starts repricing, it does tend to give the wider market a nudge and adds to the sense that this could help kick start further reductions from other big names over the coming days.
“That is especially encouraging after the volatility of the last few weeks, where lenders were far more focused on protecting margins and managing risk than competing hard on price.”
But others advised caution. Louis Mason, communications director at London-based Oportfolio Mortgages, talking to the Newspage agency, said things could change quickly.
“If this isn’t a positive signal, then I don’t know what is,” he said. “The market clearly wants to believe we’re past the peak. But let’s not get carried away.
“Mortgage rates are still at the mercy of global drama. One geopolitical wobble or surprise inflation print and lenders will reprice faster than you can refresh your browser.
“As for buyers holding out for cheaper deals, which may happen, that rarely ends well. The irony is the moment rates dip, confidence returns, competition heats up and suddenly you’re saving 0.2% on your mortgage but paying 5% more for the property.”