HSBC is reducing its mortgage rates next week, taking effect from Monday January 5, it has been announced. The major British bank is making multiple reductions to its residential and buy-to-let mortgage rates. Brokers speaking to Newspage said HSBC’s announcement was good news for people looking to borrow soon after the New Year, adding that the move could spark a “rates war” between lenders.
David Stirling, Independent Financial Adviser at Mint Wealth Ltd, expects mortgage rates to be below 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, added: “HSBC set the tone for 2026 early. They have announced decreases to interest rates across the board.
“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?”
The Bank of England cut its benchmark Bank Rate from 4% to 3.75% in December, and markets broadly expect further cuts this year that could feed through into cheaper mortgage pricing for millions of households.
Kundan Bhaduri, Entrepreneur, Investor and Landlord at The Kushman Group, thinks 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,” he said.
Mr Bhaduri added: “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.”
The rate cuts come amid broader signs of moderation in the UK housing market. Nationwide Building Society reported that UK house prices unexpectedly fell 0.4% in December 2025, leaving annual growth the weakest since April 2024.
