HSBC slashes interest on mortgages in first ‘rate war’ cuts of 2026 | Personal Finance | Finance

HSBC has cut  interest rates across a range of mortgage products today, as brokers speculate a “rate war” is brewing. On Monday, January 5, HSBC made a number of reductions to its Residential and Buy-to-Let mortgage rates.

Brokers said HSBC’s announcement was good news for borrowers so soon after the new year. David Stirling, independent financial adviser at Belfast-based Mint Wealth Ltd, said he expects mortgage rates to be sub-3.5% before winter is over. He said: “HSBC are out of the blocks early in 2026 with sweeping reductions across all their residential products.

“This is certainly good news for borrowers, as many of the other big lenders will feel the need to also cut to remain competitive, which could result in a rate war. We could potentially see sub-3.5% deals before the spring with any luck.”

Ben Perks, managing director at Orchard Financial Advisers, said HSBC has “set the tone” for 2026 early with a competitive reduction. He said: “This is a real statement of intent, and shows that they are keen to lend en masse this year. Will we see a January rate war as others undoubtedly join the fold?”

Elliott Culley, director at Switch Mortgage Finance, said the first reduction of 2026 will no doubt be followed by HSBC’s rivals. He added: “HSBC are the first lender to show their hand in the New Year and has decided to make sweeping changes to their products. Rate reductions are expected from mortgage lenders in the wake of the base rate cut in December so I would expect more lenders to make changes in early January.”

Kundan Bhaduri, entrepreneur, investor and landlord at The Kushman Group, pointed out that nearly two million will be seeking new deals this year.

He said: “Monday’s timing for this rate reduction by HSBC is perfect. Markets are expecting the Bank of England Rate to fall to 3.25% by year end. We can also see that swap rates are trading at their lowest levels since early 2022. HSBC seems to be positioning itself to capture quality borrowers before the spring rush begins.

“Around 1.8 million borrowers need to refinance this year, many rolling off ultra-cheap deals secured before rates climbed in 2022, creating a massive captive market for competitive lenders. However, I do not expect these low rates to last forever.

“Mortgage pricing wars rarely benefit latecomers, and anyone serious about borrowing should secure applications before rival lenders inevitably respond with their own new rates.”

HSBC has also announced a reduction in Buy-to-Let affordability stress rates. The move aims to support “sustainable growth” in the UK rental market and improve access to finance for landlords.

Oli O’Donoghue, head of mortgages at HSBC UK, said: “I’m pleased that we’ve been able to reduce our Buy-to-Let affordability stress rates to better support UK landlords. By lowering stress rates, we are helping more landlords enter or remain in the Buy-to-Let market.”

“This supports access to quality rental homes and housing affordability more broadly. Lowering barriers to finance and easier refinancing options can help landlords manage costs, supporting greater stability in the rental sector.”