HSBC offers loan deals
Competition to attract mortgage customers with deposits of just 10 per cent has been stepped up with the announcement of a new deal with the lowest rate the market has seen.
HSBC said its seven-year fixed-rate mortgage at 90 per cent loan-to-value (LTV) has a rate of 4.89 per cent and no fees to pay for home buyers.
According to consumer website Moneyfacts, the previous lowest rate for a similar deal was a mortgage at 5.14 per cent offered by the Chelsea Building Society earlier this year.
HSBC said it is also offering the same rate as its seven-year deal on 90 per cent LTV fixed rate mortgages for two, three and five years.
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It is also launching a fee-free lifetime tracker rate at 4.49 per cent for first time buyers and home movers with a 10 per cent deposit. Both the tracker and fixed rates are also available to re-mortgage customers with a booking fee of £599 and the deals will be offered to customers from this week.
Rachel Springall, spokeswoman for Moneyfacts, said of HSBC's announcement: "While it's great to see some low rates launched specifically aimed at first-time buyers, only the seven-year option sits as the market leader at 90 per cent loan-to-value.
"Customers will find the fee-free option particularly attractive, especially if they are trying to keep initial costs down.
"Any helping hand for struggling first-time buyers will be considered a great advantage and has the potential to assist borrowers trying to get on to the property ladder."
Borrowers have six weeks to apply for the rates as the lender said applications must be received by October, 14.
HSBC recently withdrew a market-leading five-year fixed rate mortgage deal it had launched a month earlier, saying it had used up all the money allocated to fund it.
The Bank of England and the Treasury recently launched a "funding for lending" scheme to unclog the flow of credit, but analysts say the effects of much of this are still to be seen.
Nationwide and Santander have recently announced mortgage rate increases and lenders generally have been tightening their borrowing criteria amid the weak economic backdrop, making it harder to take out a mortgage. Recent research from comparison website MoneySupermarket found the choice of 90 per cent LTV mortgages has shrunk back significantly in the last six months. HSBC has committed to make at least £17 billion in mortgages available to UK borrowers in 2012, including £4 billion to first-time buyers.