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HSBC attempts to undercut rivals with lowest ever fixed rate

Race to the bottom by mortgage lenders gives cheer to homeowners

HSBC has cut its best fixed rate mortgage from 1.99% to 1.98% , the lowest ever rate for fixed loans in the UK. The bank first launched a 1.99% in September 2009 and relaunched it twice in March 2010 and November last year. This was directly influenced by the introduction of equally low rates by Abbey and Tesco who accepted the cheap money on offer from the Bank of England’s Funding for Lending scheme.

The cheap rate is not quite as cheap as it first appears. The direct-only deal is available at 60 per cent loan to value with a £1,999 fee, or £1,499 for current account customers. This also means that it excludes nearly all first-time buyers who will struggle to raise the 40% deposit. London & Country head of communications David Hollingworth says: “This is just an attempt by HSBC to get coverage by slightly beating the other lenders. It is pathetic.”

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