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HSBC offers new low mortgage rate

The news that the Bank of England has said that the outlook for the economy is “gloomy” and hinted that the current record low interest rate was likely to remain for some time has led to a flurry of interest from mortgage lenders.

HSBC, which is one of Britain’s biggest banks, has announced that it will cut its mortgage rate to an eye watering 0.99% which will undoubtedly spark of a price war that is sure to reduce the cost of a home loan.

Without having to search through historical records and trawl the internet, this rate from HSBC is the cheapest ever in Britain. What this will almost certainly mean is that the lull which has been seen in the housing market this summer is likely to boom. Putting this into perspective, a person with a £150,000 loan could see their monthly repayments cut by a massive £3,500 per year, much more with a bigger loan of course. Put another way with a loan of £150,000 monthly repayments would be £565, compared with £855 on a lender’s typical standard variable rate. The maximum loan by HSBC is £500,000, and the savings on this size of loan would be £11,628 a year.

So what is the deal when the eye catching low rate is looked at? Well firstly there is a set-up fee of £1,999, high by anyone’s standards and in addition, borrowers have to have a 40 per cent deposit or equity in the property, the rate is also for two years only, after that borrowers will need to re-mortgage or their costs will rise.

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