How can banks make profit from mortgages with interest rate 1.29%?

The five-year gilt yield is currently 0.30%, and HSBC is paying 0.20% interest on fixed-term savings accounts (and 0.01% on many of its other savings accounts). Mortgage lending is pretty low-risk, and they can certainly make money on the spread between 1.3% and 0.3% or 0.2%. They don’t have to worry about inflation, because what they lose on the money they lend out they gain on their deposits.