HSBC, one of the leading lenders in the UK, has lowered its five-year fixed-rate mortgage again to a record-low figure.
Having already been offering the lowest rate around, of 2.19 per cent, HSBC has now reduced this to 1.99 per cent, after several other lenders reduced their rates too, potentially paving the way for a new price war. This reduction will mean that for a house worth £150,000, buyers will pay £15 less each month with a 25 year loan.
However, those who take up this option will have to pay a sizeable deposit, of 40 per cent, and also a fee of £1,499. Alternatively to the deposit, buyers could have an equivalent equity in their home.
HSBC’s actions will increase the pressure on other lenders to keep up with them, as noted by Daniel Bailey, of Middleton Finance, who said: “The five-year deals have been hotting up for some time and I think this will push other lenders to respond, which is good news for borrowers.”
David Hollingworth, of London and Country, said: “HSBC has broken quite a significant boundary by launching a rate below 2 per cent. It looks exceptional value and shows just how hard lenders are prepared to fight for new business.”
Despite the record-low rate, there are critics, as not everyone will receive a loan from HSBC even if they meet the initial criteria, as some believe HSBC is notoriously stringent on who it lends to.
“The headline rate is extraordinary, but there will be a lot of people who won’t get this as HSBC is not the easiest lender to get through,” said Andrew Montlake of Coreco, a mortgage broker.
