One of the UK’s biggest mortgage lenders, HSBC, has reduced its mortgage interest rate by 0.25. This brings its standard variable rate down to 6.74% – the biggest drop in two years and a sign that the market may begin to pick up faster again.

The news comes in the light of the recent Halifax report which shows the average property price fell by 0.1% last month, bringing the typical value of a house in the UK to £298,602.

The drop surprised many analysts in the sector who were anticipating an even bigger rise in property. This was mainly down to an increase in the number of buyers trying to push through their house purchase prior to the Stamp Duty deadline on March 31. It also surprised analysts at Nationwide, whose figures have recorded six monthly property price increases in a row, including a rise of 0.4% for February.

Prices still rising year-on-year

Despite the monthly drop, Halifax reported a 2.9% increase for property prices year-on-year.

The building society’s head of mortgages, Amanda Bryden acknowledged there had been a last-minute rush on buying, but said that momentum had already faded by the time February had come around according to their figures. This, she added, was usually down to the time it typically took for a property transaction to go through.

HSBC had dropped its mortgage interest rate after the Bank of England introduced a rate cut of 0.25% last month. The latter is also expected to carry out two further interest rate cuts of 0.25% by the end of the year. 

Net mortgage Lending increases 

Meanwhile, figures from the Bank this week shows net mortgage lending in January was the highest its been since September 2022.

In terms of regional variations from the Halifax report, house prices in Scotland had increased by 3.8 per cent in February, with the average property now worth £213,014. In Northern Ireland homeowners saw a 5.9% increase, to £205,784 for a typical property there.