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HSBC Sparks Rate War: Mortgage Cuts Begin 2026
5 Jan
Summary
- HSBC initiated mortgage rate cuts in early 2026.
- Further base rate reductions are anticipated this year.
- Approximately 1.8 million homeowners to refinance mortgages.
HSBC has commenced 2026 by cutting mortgage rates, a bold move that signals a potential price war among UK lenders. These reductions apply to both residential and buy-to-let products, taking effect on Monday, January 5th, 2026. This action follows the Bank of England's December decision to lower its base rate to 3.75%.
Mortgage brokers anticipate that other major lenders will follow HSBC's lead to remain competitive, potentially leading to significant savings for the estimated 1.8 million homeowners scheduled to refinance their mortgages this year. Many of these borrowers are coming off historically low fixed-rate deals secured before interest rates began their upward trend in late 2021.
Economists forecast at least two more base rate cuts by the Bank of England in 2026, though the Monetary Policy Committee's decisions are becoming increasingly complex. While demand for new home loans may dip, remortgaging activity is projected to surge, with some predicting fixed rates could fall below 3.5% before spring.
