He added: “These cuts are just the latest salvo in an increasingly fast-moving market. HSBC’s move is notable in that its rates are on offer to those borrowers looking to remortgage – a departure from the recent trend of pricing favouring home movers.
“With large numbers of borrowers anxiously approaching the expiry of a fix taken during the ultra-low rate period, this is hopefully a signal for more lenders to follow suit.”
On Tuesday, Halifax – another of Britain’s biggest mortgage providers – announced cuts on some of its deals by as much as 0.92 percentage points.
Leeds Building Society also cut rates by 0.49 percentage points and is now offering a two-year fix at 4.60pc.
Steven Hargreaves, of broker The Mortgage Co, said HSBC’s latest move was “further proof that the fixed-rate war is starting again in 2024”.
He and other brokers expect banks and building societies to follow suit in the next few days, as they battle it out for business following a slow year for lending in 2023.
Gross mortgage lending across the UK fell by 28pc last year, and is expected to fall by a further 5pc this year according to UK Finance, the banking trade body.
Generation Home – a small lender – was the first to launch a sub-4pc rate of 3.94pc on a five-year fix at the end of December.
Aaron Strutt, of brokerage Trinity Financial, said the cost of funding for mortgages has dropped “quite significantly” and that lenders are now starting to pass this on in the form of price reductions.
He added: “There is much more of an expectation that rates will get cheaper this year, which will come as a relief for the huge number of borrowers needing to remortgage. It has taken quite a while but rates are looking better.”
The headline rates typically start with borrowers who have loans worth 60pc or less of their home’s value. This means first-time buyers are still having to stomach higher rates.
The average two-year fixed rate was 5.92pc on Wednesday and the average five-year rate 5.53pc, according to Moneyfacts.
But Ben Tadd, of brokerage Lucra Mortgages, is still confident many of those who could not afford to buy last year will now start to come out of the woodwork with renewed confidence.
He added: “Lenders have big targets to hit in 2024 and will need to come out of the blocks with a good start early in the year.”
An HSBC UK spokesman said: “We are always striving to support new and existing mortgage customers whether they are moving onto or up the property ladder, or looking to remortgage with us. Our new fixed mortgage rates will see significant cuts across the board which will be a welcomed move. “
