HSBC Challenges Rivals With 3.95% Market-Leading Offer – Forbes Advisor UK

Find out what’s happening with today’s mortgage rates and calculate monthly repayments across a range of different rates and deals.

7 August: 5-Year Fix Requires 40% Deposit, £999 Fee

HSBC, one of the UK’s biggest mortgage lenders, has launched a sub-4% deal in response to similar moves by NatWest and Nationwide last week.

At 3.95%, HSBC’s five-year fixed-rate offer is the cheapest currently available, prompting speculation that other lenders will follow suit in the wake of the cut to the Bank of England Bank Rate – from 5.25% to 5% – at the beginning of this month.

Nicholas Mendes at broker John Charcol said: “This puts HSBC in a prime position in the market. Next, we expect similar moves from Santander, Halifax, and Barclays. August has started with strong competitive momentum.”

The HSBC deal requires a substantial deposit along with a booking fee, although cashback is also available on completion for some categories of borrower.

To get the 3.95% rate, first-time buyers with 40% deposit (60% LTV) must pay a £999 fee. Cashback is £350.

First-time buyers able to access HSBC’s Energy Efficient Homes (EEH) mortgage range who have the same deposit and pay the same fee qualify for £1,600 cashback.

For home movers with a 60% deposit, the fee is £999 but there is no cashback payable on standard mortgages, but EEH deals on these terms attract cashback of £1,250.

Existing customers borrowing more or switching loan with 60% deposit will pay £999 but receive no cashback.

Meanwhile, NatWest has launched a sub-4% fix for customers who bypass mortgage brokers and go direct to the bank instead. The 3.97% deal is available online only, to borrowers with at least a 40% deposit (60% LTV) willing to lock in for five years, and comes with a fee of £1,495 – though NatWest does pay the valuation fee for you.

Getting out of the deal early will cost borrowers an early repayment charge of 4.5% in the first year, 4.25% in year two, 4% in year three, 2.5% in year four and 1% in the final year. Once the deal expires, those who don’t remortgage will fall onto NatWest’s standard variable rate of 8.24%.

1 August: Yorkshire BS, Accord, and MPowered Mortgages Announce Cuts To Residential Fixed Rates

Yorkshire building society has cut fixed rate residential mortgage deals across its range by up to 0.25 percentage points, coinciding with the first cut to Bank Rate in more than four years, writes Jo Thornhill.

Yorkshire is offering a competitive two-year fixed rate for home purchase at 4.74% with a £495 fee and £250 cashback, for buyers with at least a 25% cash deposit.

The mutual lender has an equivalent two-year deal for remortgage borrowers with 25% equity in their property at 4.79%, also with a £495 fee and £250 cashback.

The rate reductions come as the Bank of England reduced the Bank Rate today from 5.25% to 5% in welcome news for borrowers. Bank Rate had been at a 16-year high of 5.25% since August last year. 

While commentators are not expecting today’s cut to signal a campaign of further rate reductions, it should pave the way for cheaper fixed and tracker rate mortgages.

Accord, the specialist lending arm of Yorkshire building society, has also nudged down its selected residential fixed rates by up to 0.25 percentage points, effective from 2 August. It is offering a fee-free five-year fixed rate deal for home purchase at 5.07% (down from 5.27%) for borrowers with a 10% cash deposit (90% LTV).

MPowered Mortgages has cut selected residential two-, three- and five-year fixed rates for borrowers with between 40% and 20% equity or cash deposit (60% LTV to 80% LTV). Among its new deals is a five-year fixed rate for purchase at 4.14% with a £999 fee (at 60% LTV).

David Hollingworth, associate director at broker L&C Mortgages, said: “Fixed rates have been edging down recently with small but frequent cuts helping to nudge five-year deals close to and even under 4%. 

“Today’s Bank of England interest rate decision to cut a little sooner than many had previously anticipated should only help to add further weight to those reductions. 

“We can therefore expect to see further pricing improvements in fixed rates, as lenders continue to fight hard to gain a share in a very competitive market.”