HSBC launches 1.99% five year fixed-rate mortgageShould you take advantage of low mortgage rates?

22 April 2015

Row of UK houses

Last week HSBC launched the lowest ever five year fixed-rate mortgage, at less than 2% - the first time that a rate this low has been offered on this type of product. 

Many mortgage lenders have continued to slash rates on their fixed-rate mortgage deals. On average, rates on five year fixed mortgages are now at 3.05%, according to Bank of England data.

Although HSBC is offering the lowest rate currently on the market for a five year fixed-rate mortgage, other lenders such as TSB, First Direct, Norwich and Peterborough Building Society and Nationwide are also offering five-year mortgage deals at rates of under 2.3% - scroll down to see details of these mortgages below.

To understand more about the different types of mortgages and associated rates, visit our guide to mortgages.

Fixed-rate mortgages - is it a good time to get one?

Mortgage rates have been particularly competitive in recent months. Bank of England data released earlier this month showed that demand for mortgages fell sharply in the first three months of this year - so lenders may be competing hard to combat this.

Rupert Swetman of Which? Mortgage Advisers commented: ‘With the recent low rates, introduced on a long term fixed basis, now may be a great time to ensure that you are getting the best rate for you. Of course every situation is different, but the security of a low fixed rate for a five year period could be attractive to many people.’

A mortgage adviser can help you to find the right deal for your circumstances. The Which? Group offers an independent mortgage advice service, Which? Mortgage Advisers, that looks at every mortgage from every available lender. You can also find an independent mortgage adviser using

Five year fixed-rate mortgages - five of the cheapest
LendersInitial rateFixed until:Maximum load to value (LTV)Types of borrowerFeesOverall cost for comparison (APR)
HSBC1.99%31/07/202060%Remortgage or first-time buyer£1,4993.3%
First Direct2.28%Fixed for the first five years65%Remortgage or first-time buyer£1,4503.3%
Norwich and Peterborugh Building Society2.28%Fixed for the first five years65%Remortgage or first-time buyer£1,2954.0%
Nationwide2.29%Fixed for the first five years60%Remortgage or first-time buyer£4993.4%

Two year fixed-rate mortgages worth considering

If you would prefer to take out a shorter term fixed rate mortgage deal then there are also lots of competitive two year fixed rate mortgages on offer. 

Update 1/05/2015: Since publishing this story Co-Operative Bank has launched a new two year fixed-rate mortgage with a record low rate of 1.09%.

Two year fixed-rate mortgages - five of the cheapest
LendersInitial rateFixed until:Maximum loan to value (LTV)Types of borrowerFeesOverall cost for comparison (APR)
Yorkshire Building Society1.18%30/04/201765%Remortgage or first-time buyer£1,3694.5%
Chelsea Building Society1.24%30/04/1765%Remortgage or first-time buyer£1,5454.9%
HSBC1.24%31/07/1760%Remortgage or first-time buyer£1,4993.6%
The Co-operative Bank1.24%31/05/1760%Remortgage or first-time buyer£1,4994.2%
Post Office1.25%30/06/1760%Remortgage or first-time buyer£1,9954.1%

Watch out for mortgage fees

It’s not just the interest rate you need to look at when choosing a mortgage. Low rate mortgage deals often come with large arrangement fees. 

Which fixed-rate mortgage is the cheapest for you will depend on your own circumstances e.g. how much you're borrowing and how long you will keep that mortgage for before switching. But in some cases a mortgage with a higher interest rate and smaller arrangement fees could be cheapest.

Find the best mortgage lender

If you're looking for a mortgage make sure you think about choosing the right mortgage lender as well just getting the cheapest deal. You may have a better customer experience with one lender over another.

For example TSB is currently offering a competitive rate on a five year fixed-rate remortgage, but in our most recent mortgage satisfaction survey it only achieved a customer score of 53% - visit our mortgage lender reviews to find the best.

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Which Ltd is an Introducer Appointed Representative of Which? Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Your home may be repossessed if you do not keep up repayments on your mortgage.