Lenders have stepped up the battle to cut mortgage rates for potential home buyers, with one company recently unveiling a five-year deal with a rate of under 2% – a record low in the mortgage market.
HSBC will be launching the five-year fixed-rate mortgage with a rate of 1.99%, however borrowers must have a 40% deposit in order to take out the deal.
Commenting on the record mortgage rate, Charlotte Nelson, a spokeswoman for financial information website Moneyfacts said: “This 1.99% deal is the first five-year fixed-rate mortgage to be launched below 2% and is the lowest on record that Moneyfacts.co.uk has seen.”
According to Moneyfacts’ records, which date back to 1988, the average rate on this type of mortgage is now 3.55%, having dropped from 4.04% only last year.
Good news for first time buyers
Further to this, research done by HSBC found that lenders expected demand for mortgages to increase in the next 3 months, and that they anticipate a rise in lending to people with deposits under 10%.
With the struggle for the most competitive mortgage rates showing no sign of stopping, and experts predicting that the Bank of England base rate is likely to remain at these record low levels, this is positive news for those looking to take out a mortgage in the coming year.