With the stamp duty holiday now being tapered out, there is concern – or hope, depending on your position in the market – that demand will fall off and house prices will drop. In response, two high street mortgage lenders have launched their most generous packages ever with a view to tempt more buyers to enter the market.
HSBC and TSB have launched new fixed-rate mortgages at 0.94%, the lowest rate ever for both banks.
HSBC is offering a two-year fixed-rate mortgage that requires buyers to provide a deposit of at least 40% and pay a £999 fee. Customers can sidestep this fee by choosing the ‘fee-saver’ option which comes with a higher rate of 1.14%.
TSB’s deal, which was announced last week, is targeted at people who are remortgaging. The 0.94% deal is fixed for two years, is available to those who have at least a 40% deposit and are borrowing between £5,000 and £1 million. It comes with a £995 fee but £300 cashback.
These announcements come after Nationwide Building Society launched a 0.99% two-year fixed mortgage last month. Once again, buyers must have a deposit of 40%.
A 40% mortgage is out of reach for many buyers, especially first-timers. But fear not because the government-backed 95% mortgages, announced earlier this year, are still available, enabling buyers to get on the ladder with a 5% deposit.
According to The Independent, Rachel Springall, a finance expert at Moneyfacts.co.uk, said:
“It is encouraging to see a continuation to the fixed mortgage rate war for borrowers searching for a new deal.
“HSBC now offer a record low rate of 0.94% on a fixed-rate mortgage and have made several other rate reductions which may well turn heads.
“At 1.99% the two-year fixed offer at 85% LTV (loan-to-value) is the lowest rate today and shares the spot with Halifax.
“Whether the lowest fixed rate on the market is the most appropriate choice will depend on the loan size and someone’s individual circumstances, so it’s important borrowers weigh up the overall true cost of the deal before they commit.
“There are now several lenders offering fixed mortgages priced around 1% or less and with competition continuing it will be interesting to see how low lenders are prepared to go to grab the spotlight.”