Mortgage Rates

UK mortgage value conflict hots up with 0.94% fixed-rate deal | Mortgage charges

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 that undercuts the previous best buy of 0.95% and contributes to an increasing number of deals below 1% for borrowers with large deposits.

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% loan-to-value (LTV), while those who borrow 95% of the cost of their home are at 3.39 for two years % can set. Remortgagors at TSB can lock at 1.09% up to 75% LTV for two years, but that goes up to 3.14% for between 85% and 90% LTV.

The interest rates are among the lowest ever offered, 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 1.14% interest.

Katie Cave, director of broker Clearpoint Finance, warned, “Beware of buying into short-term savings and losing longer-term better value.”