HSBC UK will trim mortgage rates on Friday. Several other high‑street banks are following suit. The moves come after a recent fall in swap rates and a pause in upward pressure on borrowing costs.
Which lenders are cutting and by how much
HSBC UK is preparing a broad set of reductions to its mortgage range on Friday, including deals aimed at first‑time buyers, people moving home and those remortgaging. Halifax Intermediaries signalled product changes from the same day, and BM Solutions also flagged reductions. Santander cut some rates on Thursday, while TSB said it will reduce rates on two‑year fixed house purchase mortgages by up to 0.45 percentage points from Friday.
Not every change is a cut. TSB warned that some of its product transfer deals and additional‑borrowing offers will rise. Lenders including Atom Bank and Skipton Building Society have already made selective reductions in recent days, according to market monitors.
Those moves are bringing more deals back to the market. Moneyfacts counted 6,665 homeowner mortgage products available on Thursday, up from a low of 5,856 on 24 March when product availability was at its narrowest. But the market remains smaller than it was before geopolitical tensions intensified; Moneyfacts said the current product list is 973 deals — 12.7% — fewer than before the conflict in Iran began.
Why swaps matter and why lenders are moving
They're a key benchmark lenders use to set fixed mortgage rates. They act like a benchmark that lets banks hedge the interest‑rate risk on the loans they issue.
When swap rates drop, lenders can shave a little off the headline rates they charge borrowers.
Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, said swap rates have been volatile but are now falling, and lenders are taking the chance to pass on the improvement to homebuyers. Bryden added that volatility remains a feature of the market, even as some costs come down.
Moneyfacts noted swap rates fell back towards about 4% from highs near 4.4% in recent weeks. That movement, combined with money‑market pricing that now anticipates fewer Bank Rate hikes than it did a short while ago, has given some lenders the headroom to announce cuts.
How markets and geopolitics are feeding into rates
Markets have reacted to a loosening of the tightest near‑term expectations for official rates. Adam French, head of consumer finance at Moneyfacts, said average mortgage rates have largely steadied since Easter and that swaps and money‑market signals are giving lenders a window to reduce product pricing.
Don't assume the improvement will stick — swap rates have bounced back before. Mr French warned ongoing uncertainty in the Middle East and what he described as the looming threat of 'Trumpflation' mean the road to cheaper borrowing isn't secure. He said mortgage pricing is driven more by expectations than by current rates, so borrowers remain exposed to sudden shifts if sentiment turns.
Across the Atlantic, benchmarks provide a contrasting backdrop. US 30‑year averages have been hovering in the mid‑6% range this month, and surveys of Treasury yields show small weekly moves can quickly feed through into mortgage pricing. Anthony Smith, senior economist at Realtor.com, told Money.com that any sustained drop in mortgage rates depends on whether recent de‑escalation in the Iran conflict turns into a durable ceasefire; without that, volatility is likely to remain elevated.
What this means for borrowers
Borrowers looking to fix now will find a few more competitive offers than they did a week ago. The average two‑year fixed homeowner mortgage rate was 5.88% on Thursday, down marginally from 5.89% the previous day, Moneyfacts said. The average five‑year fixed homeowner rate was 5.77%, unchanged from Wednesday.
Those averages are still noticeably higher than at the start of March, when the mean two‑year fixed rate was 4.83% and the five‑year was 4.95%. So while the recent cuts are welcome, they're only reversing part of the earlier increase borrowers faced this year.
Mortgage product numbers have been creeping back. Moneyfacts recorded 809 deals returning to the market since the recent low. That widens choice for borrowers who can shop around, though the total remains below pre‑conflict levels.
Remortgagers and first‑time buyers may benefit most from the latest repricing. Lenders often use short‑term fixed‑rate packages to attract those groups, and several of the announced cuts target exactly those cohorts. But anyone considering a move should be ready for pricing to shift again. Because the market is fragile, one sharp rise in swap rates or a new geopolitical shock could wipe out these cuts.
Advice for people thinking of switching or fixing
If your deal is ending soon, check the market over the next few days — small rate drops could save you money on a big loan. Many intermediaries and comparison sites are refreshing lists daily, and small improvements can make a difference when multiplied by loan size.
First‑time buyers should weigh rate moves against other costs. Fees, product eligibility and deposit requirements still matter. A slightly lower rate won't always offset a higher fee or stricter lending criteria.
Remortgagers should consider how long they intend to stay in their current property. A two‑year fix that's cheaper today may not be the best choice for someone planning to remain in a home for many years. Conversely, if rates keep trending down and you’re close to a remortgage, a short‑term fix with a lower fee could be attractive.
Where the market might head next
Money markets are currently pricing for fewer base‑rate rises than they did a few weeks ago. If markets keep pricing in fewer rate hikes, more lenders may cut mortgage prices. On the other hand, a renewed spike in swap rates or a fresh bout of risk‑off sentiment would push some pricing back up quickly.
Adam French said product availability and pricing have improved in recent days, but that borrowers should be careful because the market remains sensitive to external shocks. Lenders will react to both the swap curve and to their own funding costs; that means the pattern of cuts may be uneven across providers and product types.
For now, several big lenders are signalling the start of a modest loosening of mortgage pricing. The shifts are incremental rather than transformational. Borrowers should act with a clear checklist: compare rates, check fees, and consider how long you plan to keep the loan.
Related Articles
- Banks Forecast Three ECB Hikes — But Doubt Lingers
- BoE's Bailey: I won't rush rate rises
- Can a trust be seized after a $100,000 bank theft?
“Swap rates, which play a big role in the price of mortgages, continue to be volatile, but while they're falling, we're taking the opportunity to pass that on to home buyers,” said Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank.
This article was created with AI assistance.
