Proactive Investors - Lloyds Banking Group PLC (LON:LLOY) subsidiary Halifax has cut rates on residential mortgages after HSBC Holdings PLC (LON:HSBA) began offering deals with interest below 4% on Wednesday.
Halifax announced lower remortgage rates of up to 0.32 percentage points on Thursday on a range of its three-year fixed deals, with these set to become available on Friday.
Rival TSB Banking Group then followed with cuts of up to 0.55 percentage points on some of its two-year fixed residential and remortgage deals.
“The gloves are off,” Yellow Brick Mortgages managing director Stephen Perkins commented.
“Lenders are now duking it out daily in a serious rate bout, all trying to land scoring punches.”
HSBC had prompted speculation that lenders would start cutting mortgage rates en masse, after the bank unveiled interest as low as 3.94% on remortgages on Wednesday.
Describing the market as “pent-up”, Perkins added cuts “should get more and more explosive as we move through the rounds”.
As of Wednesday, two-year fixed mortgages averaged rates of 5.92%, with this falling to 5.53% for five-year deals, according to Moneyfacts.
This comes after lenders ramped up rates in the summer as the Bank of England repeatedly hiked base interest.
Speculation has grown recently that hikes have peaked as inflation looks to have been brought under control, with the latest cuts to mortgage rates coming as expectations build of a reduction in base interest by the Bank of England in the coming months.