Record low rates hit mortgage market: TSB and HSBC both launch two-year fixed deals at just 0.94% (but beware the hefty fees)
Lenders are enticing borrowers with the lowest mortgage rates on record.
TSB and HSBC have now both launched two-year fixed deals with an interest rate of just 0.94 per cent.
But mortgage brokers have urged caution over the eye-catching rates, which both carry a £999 fee.
Record deals: TSB and HSBC have both launched two-year fixed deals with a rate of just 0.94 per cent. But brokers have urged caution over the deals which both come with a £999 fee
HSBC yesterday announced it would lend up to £5 million to buyers on the 0.94 per cent rate, which reverts to a 3.54 per cent rate after the two-year fix ends. Borrowers have to have at least a 40 per cent stake in the home.
TSB last week launched a similar deal, offering remortgaging homeowners the chance to borrow up to £1 million and get £300 cashback too. The lowest rate available last month was 0.99 per cent from TSB.
Rob Gill, managing director at Altura Mortgage Finance, says: ‘The bun fight among lenders for low loan-to-value mortgages continues with this latest salvo from HSBC.
‘Great news for borrowers with high deposits or levels of equity, especially for well-prepared remortgage borrowers who have the time to shop around.
‘For those with the right circumstances, these record-low rates can offer huge savings to borrowers coming to the end of an existing rate.’
Several lenders have offered 0.99 per cent rates in recent months in order to capitalise on the housing market boom — though some were only for limited amounts of time.
Graham Taylor, managing director at mortgage broker Hudson Rose, says: ‘To borrow at 0.94 per cent is incredible and shows just how competitive the market is.
Criteria from HSBC are pretty sensible so, providing applicants have the required equity in the property and are looking for a short-term fix, it is a great opportunity.’
Rachel Springall, of finance data firm Moneyfacts, says it is important that borrowers weigh up the overall true cost of the deal before they commit.
‘There are now several lenders offering fixed mortgages priced around 1 per cent or less. With competition continuing, it will be interesting to see how low lenders are prepared to go to grab the spotlight.’
Broker Ashley Thomas, director at Magni Finance, adds: ‘For those borrowing less than £500,000, when factoring in the £999 arrangement fee, this product is more expensive than HSBC’s 1.14 per cent product with no fee.’
Meanwhile, Katie Cave, director at mortgage advisers Clearpoint Finance, says those with a less than perfect credit score are unlikely to benefit.
She says: ‘Anything in this price bracket is likely to carry a hefty fee too. Otherwise, how is the lender making any profit? Beware buying into short-term savings and losing out on longer-term better value.’
HSBC has also reduced rates by up to 0.3 per cent on more than 40 other mortgages — including deals for first-time buyers and those seeking a remortgage.
Meanwhile, those with a 15 per cent deposit will see the rate cut by 0.30 per cent to 1.99 per cent — the lowest since October 2020.
First-time buyers with 10 per cent deposits will be able to access a two-year fix at a rate of 2.49 per cent — the lowest since the reintroduction of low-deposit lending in January.
Business News Governmental News Finance News
Need Your Help Today. Your $1 can change life.