UK mortgage borrowers now have a choice of two loans with an interest rate of 0.94% for two years as the price war between lenders intensifies.
HSBC and TSB offer the ultra-low interest rate, falling below the best buy to date of 0.95% and contributing to an increasing number of deals below 1% for large deposit borrowers.
HSBC said 0.94% was the lowest rate it has ever offered. The mortgage has a £ 999 fee and is available to homebuyers and remortgagors. TSB’s deal, which started last week, is only available to Remortgagors and has a fee of £ 995.
Previously, the cheapest offer on the market was a two-year fixed rate of 0.95% from Platform, part of the credit union. It has a fee of £ 1,499 and is only available through mortgage brokers.
The mortgages are only available to borrowers with a deposit of at least 40%. Those who have less equity pay higher interest.
HSBC has a 5-year fixed rate of 1.29% for those taking up to 75% of the loan-to-value (LTV), while those who borrow 95% of the cost of their home have a two-year rate of 3, 39% can establish. Remortgagors at TSB can set an LTV of 1.09% up to 75% for two years, but that goes up to 3.14% for between 85% and 90% LTV.
The interest rates are among the lowest ever on offer, and show just how keen lenders are in attracting borrowers.
HSBC’s deal is available for loans of up to £ 5 million. However, Ashley Thomas, director of mortgage broker Magni Finance, said anyone borrowing less than £ 500,000 would pay less if they hit HSBC’s royalty-free deal at an interest rate of 1.14%.
Katie Cave, director of broker Clearpoint Finance, warned, “Beware of buying into short-term savings and losing longer-term better value.”