The first 5-year, below-4pc mortgage deal has been launched since the mini-Budget. This is to end the price war between lenders.
HSBC has decreased interest rates on 130 mortgages and now offers a remortgage deal at 3.99pc over five years for borrowers who have a 40pc deposit.
It is the first 5-year deal priced below 4pc in five years since October. This was before the mini-Budget panicked the markets and interest rates shot up.
Five-year fixed rates reached a peak of 6.5pc at the end of October, and have been steadily declining since then. As the price war between banks heats, fixed rates will fall further in the coming weeks.
David Hollingworth of L&C Mortgages said that HSBC’s five-year deal at 3.99pc – below the current Bank rate of 4pc — was a turning point.
Mr Hollingworth stated that “The idea of being able to fix at a lower rate than the Bank Rate would have sounded dreamland in recent months.”
These deals are offering rates many might have feared would disappear. If you were one of those borrowers who decided to ignore the rate hikes last October, it is time to seriously think about whether or not this is the right time to make a move.
The sub-4pc deal with HSBC applies only to borrowers remortgaging. However, brokers expect that similar rates will be available to new buyers within the next few weeks.
With Lloyds at 4.13pc, the next-best five-year deal available for borrowers remortgaging their homes is offered. Virgin Money cut a five-year deal for borrowers to purchase to 4.17pc last week and a ten-year deal down to 3.99pc. However, longer deals are less in demand with borrowers.
Adrian Anderson, a broker at Anderson Harris, stated that rates falling below 4pc has broken a psychological barrier. I believe they will soon be available to borrowers buying and that other large banks will follow suit.
“We have clients that are eager to make an offer on properties when rates drop below 4pc. This will increase buyer confidence.”
According to analyst Moneyfacts, the average five-year fix fell from a peak of 6.51pc last October to 5.15pc today. Meanwhile, the average two-year rate dropped from 6.65pc down to 5.43pc during the same period.
HSBC also raised its savings rates up to 0.55pc. The rate on its premier savings accounts for the most affluent customers almost doubled from 0.65pc down to 1.2pc.
