HSBC expects a 5-4 vote to cut
HSBC expects a 5-4 vote to cut(Image: Getty Images/iStockphoto)
HSBC says it now expects the Bank of England (BoE) to cut the base rate in December, by 25 basis points, to 3.75%. It had previously expected a hold. This, the bank says, is in line with market expectations, which are pricing in a 93% chance of a cut.
Mortgage experts said a cut by the Bank of England will send borrowers and the broader property market into “full-on beast mode” next year.
HSBC expects a 5-4 vote to cut, with Governor Andrew Bailey switching his vote from November, noting ‘in our view the last thing the sterling rate market needs right now is the BoE adding to a sense of confusion.
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‘Governor Bailey will be aware of this. Given he’s not made any public comment that pushes back against market pricing, we fall in line with the market and assume a December cut.
‘Beyond that, we see another three 25bp Bank Rate cuts in 2026 (at the February, April and July MPR meetings). And we keep our sub-market terminal rate forecast of 3.00%.
‘We think that policy will be returned to a neutral stance, and that a 3.50-3.75% range is too high for the UK neutral rate given its sluggish productivity growth.’
Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, said an interest rate cut appears to be nailed on.
He said: “It will give the property market a real shot in the arm and launch borrowers into 2026 in full-on beast mode.
“Whilst the economy looks lacklustre, Bailey and the Monetary Policy Committee could lead the way and ignite some growth in the property sector.”
Omer Mehmet, Managing Director at Welling-based Trinity Finance, said while a cut looks likely next week, as HSBC states, the next set of inflation data will be key.
Mehmet explained: “Markets are bracing for the Bank of England to cut next week, with Governor Andrew Bailey shifting to a dove.
“But before the rate decision we are due the latest inflation data, which, if it doesn’t play ball, still has the potential to throw a spanner in the works.”
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said that if rate cuts come, they will come at the right time.
He said: “Given 2026 has approximately 1.9 million fixed rate deals ending, with many of those borrowers coming off very low rates, a 2026 packed with rate cuts will come as welcome news to borrowers.”
