Fri 02 Jan 2015 View all news articles

Low-cost mortgages available as lenders embark on new price war for 2015

House hunters will be encouraged by news that lenders are expected to embark on a mortgage price war as we enter 2015.

HSBC and First Direct have launched low cost fixed-rate deals at a time of low inflation and delays in the lifting of interest rates.

HSBC’s new deals include what may be the lowest ever two-year fixed-rate home loan, priced at 1.29 per cent. This deal is restricted to customers with a 40% deposit and it includes a fee of £1,499, but it trumps the bank’s previous offering priced at 1.49 per cent.

HSBC’s subsidiary First Direct has also launched cheap fixed-rate mortgages, including a loan fixed at 2.39 per cent for five years. This is understood to be the lowest ever five-year fix, cheaper than a 2.44 per cent deal offered by Yorkshire building society last year. However, the First Direct loan will not be open to all borrowers; the maximum loan-to-value is 65 per cent, and it includes a £1,450 fee.

First Direct has also launched a three-year fixed-rate mortgage at 1.99 per cent, which is well below what many other lenders are charging, and has become the latest bank to move into offering 10-year fixed-rate deals. Banks and building societies have been rushing out decade-long fixed-rate mortgages, with experts attributing this to plunging inflation and a growing expectation that interest rates will stay low for longer.

The moves by HSBC and First Direct come as competition in the mortgage market has pushed many rates to the lowest on record. The price cuts have tended to centre on fixed rates, which have been hugely popular with borrowers lately because of the certainty they provide. At some points in recent months about nine in 10 of new mortgages have been taken out on a fixed basis.

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Source: Gloucester Citizen 

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