The UK’s lowest fixed-rate mortgage rate of 0.94% for people with large deposits has been launched by both HSBC and TSB.
HSBC has now reduced its first lower than 1% deal in 5 years from 0.99% last month to now 0.94% pa. This is the cheapest ever home loan they have offered in the UK and worldwide. The 60% loan-to-value product includes a £999 fee.
TSB’s new 0.94% fixed rate is for re-mortgage customers that have a 40% deposit and includes a £995 fee.
The lowest fixed-rate mortgage prior to HSBC and TSB’s announcement on 6th July 2021 was by Co-operative Bank’s 'mortgage brokers only' lending arm, Platform at 0.95% pa.
According to the latest Moneyfacts data, there are currently 5 lenders offering lower than 1% fixed-rate mortgage products including Cumberland Building Society and Nationwide Building Society.
Borrowers may be attracted to the new sub 1% deals but we suggest in our comments below that thet are for the few and not the masses.
As the stamp duty holiday comes to an end, a property value of £250,000 will be exempt from stamp duty compared to £500,000 which has been in place since July 2020. In October, stamp duty will return to its usual level of £125,000 and for first time buyers £300,000 and perhaps this is another way to keep enquiries rolling in.
Since writing this article even more lenders are now coming in with near zero rates. Borrowers will likely need to meet strict criteria to qualify and anyone with debt or a less than prefect credit score is unlikely to be able to borrow below 1%. These are headline grabbing rates but only for the few and not the many. No doubt the publicity will be welcome and keep enquiries up after government incentives end. A gimmick in our opinion.