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HSBC launches ‘cheapest ever’ fixed-rate mortgage

0.99% deal for borrowers with deposits of 35% or more

HSBC mortgages Fixed-rate mortgages offer short-term security, but often come with high arrangement fees

HSBC has launched the first fixed-rate mortgage with an interest rate below 1% since records began.

However, the 0.99% two-year fixed-rate deal, released today, isn’t for everyone. Borrowers will need a deposit of at least 35% to apply, and will have to pay a product fee of £1,499. 

  • If you’re searching for a mortgage, Which? Mortgage Advisers can analyse the market and recommend the best deal for your personal circumstances. For a free consultation, call 0808 252 7987.

The HSBC 0.99% mortgage: what you need to know

The new deal is available for homebuyers and remortgagers borrowing up to £500,000. Customers will be able to overpay up to 10% of the balance each year without incurring early repayment charges.

After the two-year fixed period ends, the mortgage will be moved to HSBC’s standard variable rate (SVR), which is currently 3.94%.

It remains to be seen whether the new deal heralds the start of a price war, but with the Bank of England signalling that interest rates could stay at rock-bottom levels for the forseeable future, other lenders could soon follow suit.

Mortgage reviews: how does HSBC compare?

In our April 2016 mortgage satisfaction survey, we asked 5,002 members of the public how satisfied they were with their mortgage provider.

Overall, HSBC came seventh out of 25 providers, with a customer satisfaction score of 66%.

HSBC customers gave it an average three stars out of five for most aspects of its customer service, including the application process, transparency of charges, and query and complaint handling. 

However, the mortgage lender was awarded four stars for value for money – a category where no lender scored five out of five, making HSBC one of the best providers in this respect.

Should you get a fixed-rate mortgage?

If you take out a fixed-rate mortgage, your interest rate will stay the same for a set period.

This can be helpful if you’re working to a tight budget or like the security of being able to predict your outgoings each month. 

But while fixed-rate deals are popular at the moment, they’re not the best type of mortgage for everyone. 

As with the HSBC deal, fixed-rate mortgages sometimes carry hefty arrangement fees and the best rates are often only available to people with big deposits.

More on this:

Your home may be repossessed if you do not keep up repayments on your mortgage.

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