HSBC became the latest lender to offer a mortgage deal with an interest rate of less than 1% in the latest foray into the escalating war on mortgage rates.
Banks and building societies are fighting for clients in the insane real estate market, which the chief economist of the Bank of England described as “on fire” as government stamp duty holidays are combined with large deposits saved during the lockdown to boost demand.
On Friday, HSBC cut the rate on its two-year fixed product for those with deposits or equity of at least 40% by 0.05%, dropping it to 0.99%. Borrowers have to pay a £ 999 fee, but the last time a bank offered such a low rate was almost five years ago.
HSBC said that people looking to move up the corporate ladder or climb the corporate ladder, or who are ending a fixed-rate deal, can get “some of the lowest rates we have offered for a while.”
room lenders have already made deals below 1% The platform, the intermediary lending arm of the Cooperative Bank, cut the rate on its 40% deposit product this week to 0.95%. This is the lowest rate on the market.
“These deals would be ‘great’ if you had an impeccable credit rating, a standard source of income and a very large deposit available,” said Matthew Fleming-Duffy, director of Cherry Mortgage & Finance.
“These products are great for a minority of consumers and certainly put these lenders at the top of the best buy table, but for many potential borrowers – with more complex needs or smaller deposits – these attractive rates are unfortunately unattainable.”
Real estate demand pushed average house prices over the past year increased by 10.9%, the fastest pace in nearly seven years, according to Countrywide the establishment of society. Prices rose an average of 1.8% in May, following a 2.3% rise in April, according to statistics, bringing the annual growth rate up from 7.1% a month earlier.
As a result, the average UK home price reached £ 242,832, up almost £ 24,000 over the past 12 months. Ten years ago, in May 2011, the average home price in the UK was below £ 170,000.
Mark Harris, executive director of mortgage broker SPF Private Clients, said it was a “super competitive market for borrowers” where banks were willing to lend given the low base rate. “We sit and think how much the rates can fall?” he added.
“The big balance sheet lenders want the cash on their balance sheet to be zero in terms of paying deposit rates, so even if they go out the door at 1%, while that margin is paltry, it’s still a field. . “