FOLLOWING in the footsteps of Barclays, HSBC has announced that, with effect from Thursday 23rd April, it will be making a number of reductions to its residential and buy-to-let mortgage rates.
Brokers welcomed the news but warned borrowers to be quick and mortgage-ready in the current market as rates can move back up very quickly with events in the Middle East still highly volatile.
Just a week or so ago, for example, Moneyfacts revealed that the average shelf-life of a mortgage was just eight days, a record low.
Weary market
Ken James, Director at London-based Contractor Mortgage Services, said: “We’re seeing more rate cuts this week, with HSBC the latest lender to reduce following Barclays, but whether they are enough to wake a weary market is another thing altogether.
“The question is simple: will the rate cuts we’re seeing be enough to re‑energise a market that has been absorbing steady rate increases?
“The reality is that, despite the headlines, most of these cuts merely shave back some of the rises that have accumulated since the Middle East conflict sent swap rates climbing.
“In reality, pricing remains noticeably higher than the levels borrowers enjoyed before that geopolitical shock rippled through global markets.
“All in all, while these cuts are welcome, they’re not transformative. They ease pressure, but will they get the market moving again? That is the real test.”
Here today…
Charles Hart, Business Principal at Milton Keynes-based LionHart Mortgages & Protection, urged borrowers to be fast as rates today could be gone tomorrow.
He said: “The rate reductions of the last few days appear to be corrections from lenders who over-reacted when rates were rising, or simply priced themselves out of the market due to the high levels of applications they were receiving.
“In the current climate, it’s important borrowers seek advice on a wide range of options and, when deals or opportunities present themselves, they need to act quickly, as the deals may not be there tomorrow.”
Andrew Montlake, CEO at London-based Coreco, a mortgage broker, believes the latest round of cuts may not be enough to boost sentiment unless they become more sustained.
He said: “Yes, some lenders, most lately HSBC, are now starting to trim their mortgage rates but there is still a lot of uncertainty — and sentiment is everything in the property market.
“To improve sentiment, the cuts we’re seeing will need to gain momentum and form an industry-wide trend.”
