Product review: HSBC 2.99% fixed-rate mortgage
In an attempt to give the mortgage market a much-needed boost, HSBC has launched its lowest ever fixed-rate mortgage.
Coming in at 2.99% for five years, investors must have a 40% deposit or equity to qualify. A seven-year rate of 3.99% is also offered, representing another lowest-ever rate for the firm.
Peter Dockar, head of mortgages at HSBC, said, “This is the lowest-ever five-year fixed rate to come to the market and with the security of our retail deposit funding we are committed to offering competitive rates to benefit our customers with what is for many their largest monthly commitment.”
Both the five- and seven-year options have a booking fee of £1,499 and are available from HSBC direct.
At the same time, HSBC also launched four tracker or discount-rate mortgages, for both 60% and 90% loan-to-value (LTV) ratios. The 60% LTV lifetime tracker is 2.49% above the Bank of England base rate, so currently stands at 2.99%, and is free of all booking, valuation and completion fees.
This low rate is good news for the market and will hopefully give some impetus for other providers to do likewise.
However, the requirement of 40% in deposit or equity is no easy task and will put the product out of reach for a huge proportion of the house-moving market.
First-time buyers are the real problem area in the mortgage market at the moment, with most not having the deposit needed to get on the ladder, coupled with poor mortgage rates for those that do.
This new HSBC offering is unlikely to help this group since most can only dream of a 40% deposit.
That said, MoneySupermarket.com reports the next best fixed-rate mortgage is Leeds Building Society’s three-year fixed rate of 3.25%. While the rate is higher, it comes with a shorter term. The next most competitive five-year rate is 3.79% from Nationwide, which although only requiring 70% LTV, has a much higher rate.
HSBC has seen good business in the mortgage market, reporting a 16% rise in the number of approved mortgages in the first six months of 2012 compared to the same period last year. This product will no doubt boost the figures.