UK mortgage borrowers now have a choice of two loans with a fixed interest rate of 0.94% for two years as the price war between lenders escalates.
HSBC and TSB offer an ultra-low rate that is below the previous best buy of 0.95% and increases the number of transactions below 1% for borrowers with large deposits.
HSBC said 0.94% is the lowest rate it has ever offered. His mortgage comes with a £ 999 fee and is available to home buyers and restorers. The TSB deal, which launched last week, is only available to remortgagors and carries a £ 995 fee.
Previously, the cheapest deal on the market was a two-year flat rate of 0.95% from Platform, which is part of the Cooperative Bank. It has a commission of £ 1,499 and is only available through mortgage brokers.
The mortgage is available only to borrowers with a deposit of at least 40%. Those with less capital will pay higher rates.
HSBC has a five-year flat rate of 1.29% for those borrowing up to 75% of the loan value (LTV), while those who borrow 95% of their home’s value can set 3.39% for two years. Remorthagors in TSB can be fixed for two years at the level of 1.09% to 75% LTV, but this figure rises to 3.14% for LTV values from 85% to 90%.
The rates are among the lowest ever offered and show how interested lenders are in attracting borrowers.
The HSBC deal is available for loans up to £ 5 million. However, Ashley Thomas, director of mortgage broker Magni Finance, said anyone who borrows less than £ 500,000 would pay less if they do a deal without HSBC’s commission at a rate of 1.14%.
Katie Cave, director of brokerage Clearpoint Finance, warned: “Beware of investing in short-term savings or losing more long-term benefits.”