HSBC Break 4% Threshold with 3.99% Five-Year Fixed Rate Mortgage
HSBC appear to be the first to break the 4% threshold with a 3.99% five-year fixed rate mortgage offering, the first since 2022’s hike.
Since the mini-budget the fixed rate peak has experienced a slow but steady decline, with HSBC’s announcement of their sub 4% five-year fixed rate, the market is poised to see how competitors respond.
Could this be the start of the next lender price war? If so what does this mean for youâ€¦
What is driving Mortgage Rate changes?
The mini-budget of September 2022 saw a spike in the average mortgage rate, with rates peaking at an average of 6.5%.
The Bank of England continues to raise the base rate, hitting 4% this month, the highest in over a decade.
So, why are we seeing a surge in low fixed-rate mortgage offerings?
As a result of mortgage rates peaking in 2022, the housing market has slowed considerably. Cautious borrowers have postponed moving, waiting for the market to settle.
Mortgage Lenders rely on Swap Rates as an indicator of future market conditions when pricing their mortgage products.
Five-year mortgage swap rates are currently around 3.5%, this indicates that banks believe this is where interest rates will be in approx. 5 years, a far more positive outlook than we have recently experienced. As such, lenders can hedge their bets and bring more competitive offerings to the marketplace.
So, what does this all mean in real terms?
Home Legal Direct Co-Founder Oliver Meddick believes: