HSBC has cut the interest rate on its five-year fix by 0.10%, as the mortgage price war intensifies.
The bank has also made a number of cuts across its mortgage range of up to 0.25%.
The five-year fix has an interest rate of 1.69%, the lowest currently on the market.
The product has a £999 fee and borrowers will need to have a deposit of 40%.
For borrowers with smaller deposits of 10%, the two-year fix has been reduced to 1.94% (£999 fee), while the two-year Feesaver fix at 90% LTV has been cut by 0.10% to 2.34% (no fee).
For those looking for a greater degree of certainty, its 10-year fixed rate mortgage has been cut by 0.25% to 2.69% for borrowers with a 30% deposit and a £999 fee.
David Hollingworth, mortgage expert at L&C Mortgages, said: “Whilst HSBC has made a number of changes to its products, the most eye catching one is its five-year fixed rate.
“This is yet another signal that the mortgage market is more competitive than ever and lenders are scrapping it out to attract business, whether it’s from those buying their first home, moving house or looking to switch to a better deal.
“More lenders fighting for business means that they need to stand out from the crowd and truly differentiate themselves. This, coupled with some easing in cost of funds, is forcing lenders to offer rates that demand attention. As a result, lenders are squeezing whatever they can out of their deals and offering more and more eye catching rates.”
Only a few months ago it looked as if the era of record low rates could be over, but recent cuts by a number of lenders suggests competition in the mortgage market is heating up again.
Since the financial crisis in 2008 mortgage rates have steadily fallen.
The Bank of England cut interest rates in August from 0.50% to 0.25% – the lowest on record and the first interest rate cut since 2009 when the financial crisis was at its peak. This led to a number of lenders cutting their rates.
Rachel Springall, finance expert at Moneyfacts, said: “HSBC’s new 1.69% five-year fixed mortgage becomes the current lowest rate on Moneyfacts.co.uk records today over this term and comes just a few weeks after Atom Bank caused a stir with its record-low 1.29% deal which has since been withdrawn.
“It’s encouraging to see a bank with a large high street presence enter the price war as borrowers may well want to guarantee their monthly mortgage payments over the next five years with a familiar brand that’s available to visit on foot. The next lowest deal in the five-year market comes from Barclays priced at 1.70%, but it is limited as the minimum advance is £500,000.
“Borrowers with a small 10% deposit and who have limited funds upfront may find its new 2.34% deal attractive as it carries no booking fee and offers a free valuation, which could be ideal.
“As with any mortgage it’s important to choose one based on the overall true cost, the lowest rate deal is not always the best.”
Last month, Yorkshire Building Society reignited the mortgage price war with the lowest interest rate ever available in the UK at 0.89%.
The 0.89% rate represents a discount of 3.85% from the Society’s standard variable rate which is currently 4.74%.
However, while the record busting rate looks good on paper the two-year deal has a product fee of £1,495 and is only available to buyers with a 35% deposit.
In March, Yorkshire launched a 0.99% two-year mortgage, its lowest ever fixed rate product.
The rate matches Santander’s 18-month fixed rate deal at 0.99% which was launched in February.
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