HSBC issues verdict on Bank of England interest rates decision | Personal Finance | Finance

HSBC has signalled that the Bank of England will cut interest rates this month in a major shift in position.

Industry insiders claim the move is likely to send the property market into “full-on beast mode”.

In a research note published overnight, the bank said it now expects the Monetary Policy Committee (MPC) to vote 5–4 in favour of a 25 basis point cut, taking the base rate from 4% to 3.75% in December. Until now, HSBC had forecast a hold.

The bank noted that the shift mirrors market sentiment, which is pricing in a 93% chance of a cut.

It added that Governor Andrew Bailey is expected to switch his vote from November, warning that “the last thing the sterling rate market needs right now is the BoE adding to a sense of confusion”.

HSBC said: “Given he’s not made any public comment that pushes back against market pricing, we fall in line with the market and assume a December cut.”

Beyond December, HSBC expects three further 25bp cuts in 2026 — in February, April and July – and is sticking to its terminal base rate forecast of 3.00%. It argues that the UK’s neutral rate lies below 3.50–3.75% “given its sluggish productivity growth”.

Mortgage brokers said a cut now – combine with rate reductions from several lenders – would inject fresh life into Britain’s flatlining housing market.

Ben Perks, Managing Director at Orchard Financial Advisers, said the cut “appears to be nailed on”, adding: “It will give the property market a real shot in the arm and launch borrowers into 2026 in full-on beast mode.

“Whilst the economy looks lacklustre, Bailey and the Monetary Policy Committee could lead the way and ignite some growth in the property sector.”

However, Omer Mehmet, Managing Director at Trinity Finance, told Newspage that inflation figures due next week could still upset expectations.

He said: “Markets are bracing for the Bank of England to cut next week, with Governor Andrew Bailey shifting to a dove.

“But before the rate decision we are due the latest inflation data, which, if it doesn’t play ball, still has the potential to throw a spanner in the works.”

Riz Malik, Director at R3 Wealth, said any easing would arrive at a critical moment.

“Given 2026 has approximately 1.9 million fixed rate deals ending, with many of those borrowers coming off very low rates, a 2026 packed with rate cuts will come as welcome news to borrowers.”

Currency specialist Tony Redondo, Founder of Cosmos Currency Exchange, said the pound faces an “extremely challenging” 2026 as inflation drops towards 2%, growth slows to 0.9%, and the labour market softens.

He said: “The December 18 0.25% cut to 3.75% is just over 90% priced in.

“At November’s meeting, before the Budget, Governor Bailey swung a tight 5-4 vote to hold at 4%, with four members backing a cut, setting up December for action.

“The real debate centres on 2026’s pace: the OECD predicts two more cuts to 3.5% by June before pausing, while HSBC forecasts a more aggressive path to 3% by year-end.

Either trajectory suggests continued Pound weakness, particularly against the Euro.”

Shaun Sturgess, Director at Sturgess Mortgage Solutions, said: “2026 is shaping up to be a far more active year than 2025, with lower mortgage rates powering the property market and boosting sentiment among borrowers.”