HSBC’s New Sub-4% Mortgage Offering
HSBC has recently unveiled an attractive new mortgage option with a rate of 3.98% for a five-year fixed term, despite many other lenders retracting their most competitive deals. However, there are specific conditions that potential borrowers must meet to qualify.
To access this low rate, customers must have an annual income of at least £100,000 and be classified as a Premier customer with the bank. Aaron Strutt from brokers Trinity Financial remarked, “While this rate is highly competitive, its availability will be limited due to the stringent income requirement.”
Nevertheless, Strutt added, “HSBC’s move indicates that lenders can still provide appealing mortgage rates, even amid the ongoing economic uncertainty driven by inflation and the mixed signals regarding prospective base rate reductions this year.”
This new mortgage deal entails a £999 fee and is particularly geared towards first-time buyers who can provide a substantial deposit of 40%.
Details on Remortgage Rates
The remortgage rate associated with this offering is slightly higher at 3.99%. To qualify as a Premier customer, applicants must either deposit their annual income into an HSBC Premier bank account or maintain savings or investments totaling at least £100,000 with HSBC in the UK.
This launch comes on the heels of a minor increase in mortgage rates observed over the past week, following a prior decline earlier this year. Numerous lenders adjusted their rates upward after inflation figures rose from 2.5% to 3%, particularly affecting swap rates, which are crucial for mortgage pricing.
With higher inflation, the Bank of England may opt to maintain elevated interest rates for an extended period, with market traders perceiving a slim chance of rate cuts coming in March. Experts caution that this scenario, along with unexpectedly high wage growth figures released last week, could lead to the disappearance of the best mortgage deals and a slower introduction of new, lower rates.
For instance, Santander recently removed its five-year fixed rate at 3.99%, replacing it with a new rate of 4.06%. Conversely, Barclays continues to offer its five-year deal at 3.99%, and there remains a selection of lenders providing five-year fixed rates around 4.1%.
According to Moneyfacts, the current average two-year fixed mortgage rate stands at 5.39%, while the average five-year rate is 5.22%.
Should You Consider Fixing Your Mortgage Now?
If your current mortgage deal is nearing its expiration, it’s advisable to begin exploring new deals approximately three months ahead of the end date. Most lenders allow you to lock in a new rate several months before it takes effect, meaning you could secure a rate now even if your existing deal concludes in May.
- By locking in a lower rate now, you protect yourself against potential future increases.
- If rates subsequently decline, you have the flexibility to switch to a more favorable deal.
Another alternative is to consider a tracker mortgage, which adjusts in line with the Bank of England’s base rate—lowering if the base rate decreases and rising if it increases. While these are typically more expensive than fixed-rate options, they offer borrowers the opportunity to wait for potentially lower fixed rates before committing.
