HSBC unveils lowest-ever fixed rate mortgage

The banking giant is giving customers the chance to fix their mortgage at 2.99% until 2017. Is there a catch?

Let’s start by saying HSBC’s deal is undeniably attractive – allowing homeowners to pay below three per cent on their mortgage for the next five years. In fact, it is the lowest home loan of its type ever offered by any lender.

However, the deal does carry a few possible downsides. First off, HSBC requires a deposit of 40%, which means many potential borrowers won’t qualify.

What’s more, those who are accepted will pay a pretty substantial booking fee of £1,499.

In addition to the market-leading five-year deal, HSBC has launched a seven-year mortgage with a rate of 3.99% and fee of £1,499.

Peter Dockar, Head of Mortgages at HSBC, said ‘Every borrower has different needs from their mortgage. We recognise that many are looking for certainty with their mortgage payments over the longer term and have launched these products to meet that demand.’

Other long-term fixes

If HSBC’s deal doesn’t appeal to you, there are a number of attractive alternatives available.

In the five-year fix market, Yorkshire Building Society charges 3.79% to borrowers with a 35% deposit. Although this deal is fee-free for new customers, existing customers face a charge of £499.

Those who would prefer the security of an even longer fixed rate mortgage could consider a 10-year deal with Leeds Building Society. The lender offers a rate of 4.58% to those with a 25% deposit for a booking fee of £199.

What about a tracker?

With the Base Rate held at 0.5% since March 2009 and experts predicting a rise is unlikely to come any time soon, many borrowers might be considering taking out a tracker mortgage.

The Post Office has a two-year tracker with an initial rate of 2.89% (2.39% above Base) and a £995 arrangement – available to those with a 25% deposit.

With HSBC’s lifetime tracker, borrowers with a 40% deposit can pay an initial rate of 2.64% (2.16% above Base) for the entire term of the loan.

Although HSBC doesn’t charge any early repayment charges, there is a booking fee of £999.

**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**

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