HSBC cuts Mortgage Rates to Boost Borrowing in 2026

HSBC has become the first major UK lender to cut mortgage rates in 2026, offering borrowers an early boost as the year begins. The move applies to both residential and buy-to-let mortgages and takes effect immediately. It follows the Bank of England’s decision to cut the base rate to 3.75% in December. Market watchers see the decision as a signal that lenders are ready to compete more aggressively.

Competition expected
Industry experts say HSBC’s action could trigger a broader rate war among high street banks. By moving first, the lender positions itself to capture demand from homeowners and landlords seeking better deals. Financial advisers note that rival banks may feel pressure to follow suit to defend market share. Increased competition could translate into meaningful savings for borrowers.

Refinancing wave
Around 1.8 million homeowners are expected to remortgage in 2026, many rolling off fixed-rate deals secured before rates began rising in late 2021. Average two-year fixed residential mortgage rates currently stand near 4.8%, with buy-to-let rates slightly lower. Analysts suggest that if competition intensifies, sub-3.5% deals could emerge before spring. Variable-rate borrowers linked to the base rate will see immediate repayment reductions.

Housing market impact
Lower mortgage costs could provide modest support to the housing market after a period of slowing price growth. Nationwide recently reported subdued annual house price gains, reflecting affordability pressures. Cheaper borrowing may ease refinancing and improve buyer sentiment. Economists expect up to two further base rate cuts this year, though policymakers remain cautious.