by Mark Johnston
HSBC Slash its Mortgage Rates Again!
Lenders continue to slash rates to attract borrowers it seems that the HSBC has become the latest lender to flex its muscle in the mortgage market.
According to Ian Gordon, a banking analyst at Investec, the broker, “The combination of new lenders, a renewed appetite to lend among the incumbent banks and cheap funding from the Bank of England could see rates fall by up to 0.2 of a percentage point”.
The Funding for Lending Scheme which has been offered by the Bank of England provides £80 billion worth of cheap loans and this scheme has been tapped by many lenders, helping them to offer lower rates.
HSBC, however, has not accessed the scheme, although it does appear that the scheme has on a whole pushed down wholesale borrowing costs for all lenders whether or not they choose to participate in the scheme.
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.”
Therefore the bank has currently launched a two year fixed rate at a new record low of just 1.49 per cent and has become the first lender to reduceits mortgages rates below 1.5 per cent.
This rates is available to borrowers with a 40 per cent deposit or equity and also comes with a £1,999 fee.
This particular rate equates to a £50 decrease in monthly repayments or £600 a year on an interest only basis. On a repayment loan the reduction would be £30 a month, assuming £300,000 is borrowed.
HSBC has also cut the rates on a two year discount, from 1.75 per cent to 1.69 per cent, and a lifetime tracker from 2.28 per cent to 2.19 per cent. They have fees of £1,499 and £1,999, respectively.
Along with these rate the lender is also introducing two new five year fixed rate loans at 60 per cent loan to value (LTV). There is a 2.59 per cent product with a £1999 fee and a 2.99 per cent product with a £99 fee.
Rachel Springall, finance expert at Moneyfacts.co.uk said: “The 1.49 per cent two year fixed is the lowest rate in the market”.
David Hollingworth, of mortgage broker London & Country, added: “The rate is eye catching to say the least and undercuts the current lowest rate from Chelsea BS by a margin. Although it does carry a substantial fee of £1,999. That fee will have a major bearing on the overall cost of the deal and will certainly skew it in favour of larger loans”.
However, Trinity Financial Group product and communications manager Aaron Strutt says: “I do not think other lenders will go lower but I cannot imagine that Yorkshire & Chelsea, which have been vying for the top of the best buy table recently, will want to see HSBC leading the best buyer market so it would come as no surprise if Chelsea were to offer a new, lower rate in the coming weeks.”
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