Mortgage rates falling at HSBC as UK affordability improves

Mortgage rates are falling at HSBC UK, which is reducing rates across its residential and buy-to-let ranges from 19 August 2026, according to the trade site Mortgage Soup. The cuts cover first-time buyers, home movers and people remortgaging, including deals on homes with an A or B energy performance certificate.

The change comes as Zoopla reports that 51% of two- and three-bed houses for sale in Britain are listed at a price a household on an average income can afford, up from 45% a year ago. The picture is mixed, though. Zoopla says average mortgage rates now exceed 5%, having started the year at 4%.

HSBC mortgage rate cuts: what has changed

Mortgage Soup said HSBC is cutting two-year Fee Saver deals for first-time buyers between 60% and 90% loan-to-value (LTV), and five-year Fee Saver mortgages between 60% and 95% LTV. Home mover reductions apply to selected two-year and five-year mortgages at up to 95% LTV. Remortgage cuts span Fee Saver, Standard, High Value Mortgage and Premier Exclusive deals, including products with cashback.

The lender is also adding 80% and 85% LTV options to its High Value Mortgage range, with two-year and five-year fixed rates and two-year trackers. Buy-to-let and international products are being cut as well. Mortgage Soup did not publish the new rates, so the size of each reduction is not known and borrowers will need to check HSBC’s rate tables or ask a broker.

Premier rates are available only to existing HSBC Premier current account holders. Anyone without an eligible account when they apply must start with a product from the standard range. Applications on existing product codes had to be submitted in full by midnight on 18 August, with supporting documents due within 30 calendar days.

Mortgage affordability improving across the UK

Zoopla’s calculation assumes a household with an average combined income of £53,500, a mortgage of 4.5 times gross income and a 20% deposit. On that basis the household can afford a home listed at up to £301,000. The biggest improvements have been in southern and eastern regions, where Zoopla points to income growth, more homes for sale and flat to falling prices.

Zoopla said more than two thirds of houses in northern England and Scotland are affordable, while London remains the least affordable market, with fewer than 100 two- and three-bed houses priced below £301,000. Sales agreed are 9% lower than a year ago as uncertainty weighs on buyer confidence.

What a one-point rate rise means in pounds

Higher rates offset much of the gain. Zoopla’s Richard Donnell said rising incomes have brought more homes within reach, but “the impact is being offset by higher mortgage rates which are adding to the monthly costs of taking out a new mortgage”. He added that the extra cost is greater in southern regions, where prices are higher.

To see the scale, take Zoopla’s example household. A mortgage of 4.5 times a £53,500 income is £240,750. Over 25 years on a repayment basis, our own assumption, that costs roughly £1,271 a month at 4% and roughly £1,407 at 5%. The difference is about £136 a month, or around £1,600 a year, before fees.

These are Reported.News calculations, not Zoopla figures, and real deals will differ with term, fees and deposit size. They do show why a cut by one lender matters to borrowers while the market average still sits above 5%.

What happens next for fixed rate mortgages

The wider backdrop is not one of falling rates. According to Sharecast, the Bank of England’s Monetary Policy Committee has left Bank Rate at 3.75% for six consecutive meetings and warned it would raise it if inflation keeps climbing. Consumer price inflation stands at 3.1%, against the Bank’s 2% target. Net mortgage approvals fell to 54,900, the lowest since December 2023.

Matt Swannell, chief economic adviser to the Item Club, said: “We expect the MPC to raise Bank Rate in November and February. As a result, mortgage rates are likely to remain close to 5% for the rest of this year and into next.” That is a forecast, not a certainty.

For borrowers, the practical steps are to compare the lender’s current rate table with the wider market, check any arrangement fee as well as the headline rate, and note how long an offer lasts. The sources reviewed for this report covered HSBC only, so anyone considering Nationwide, Accord or another lender should check their current rates directly.