Over the last year, high value mortgage rates have fallen significantly. It’s been possible to fix your home loan at under 2 per cent for some months but now a major lender has slashed its rates yet further – and is offering a deal below the magic 1.5 per cent mark.
HSBC has become the first lender to offer a short term fixed rate product at below 1.5 per cent. The bank has cut the cost of its cheapest two year deal to just 1.49 per cent, undercutting the ‘best buy’ rates by up to 20 basis points. We look at this latest deal next.
HSBC launch fixed mortgage rates at 1.49 per cent
Over the last year, the government’s Funding for Lending Scheme has provided £80 billion worth of cheap loans to many lenders, helping them to offer lower rates. Despite the fact that HSBC has not accessed the scheme, the Daily Telegraph reports that ‘its very existence has pushed down wholesale borrowing costs’.
Large mortgage rates are also under pressure because of several aggressive new entrants to the market, with other lenders such as the Home & Savings Bank and NBNK also set to launch low cost mortgage products.
HSBC has now launched a two year fixed rate at 1.49 per cent with a £1,999 fee. It has also released a 1.69 per cent rate two year discounted rate deal with a £1,499 fee and 2.19 per cent lifetime tracker with a £1,999 fee. These high value mortgage rates are available to borrowers with a 40 per cent deposit or equity.
“This new deal undercuts the previous best buys by around 0.2 per cent,” says Islay Robinson, CEO of London mortgage broker and million pound mortgage specialist Enness Private Clients. “While a fall of just 20 basis points might not seem like much, it equates to a £125 reduction in the monthly payment of someone with a £750,000 interest only mortgage.”
Rachel Springall, finance expert at Moneyfacts said: “The 1.49 per cent two year fixed is the lowest rate in the market. First-time buyers will be pleased to see a market leading rate still on offer if they have a 10 per cent deposit and enough money to cover mortgage fees.”
As well as the record-breaking short term fixed rates, HSBC is also introducing two new five year fixed rates at 60 per cent loan to value. These are a 2.59 per cent five year fixed deal with a £1,999 fee and a 2.99 per cent five year fixed with a £99 fee.
“The five year fix with a low rate is perfect for borrowers with a smaller mortgage,” adds Mr Robinson, the London mortgage advisor and large mortgage specialist. “Working out the total cost of borrowing including both the interest rate and fee is vital in order to get the right deal. That’s why we always suggest that borrowers speak to a qualified mortgage broker who can work out the best overall deal – which isn’t always the lowest headline rate.”
Peter Dockar, head of mortgages at HSBC, said: “We have seen increasing confidence in the market and with mortgage rates at an all-time low now is a good time for borrowers to review their existing rates.”
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