Mortgage bonanza as lenders chase Christmas bonus

Lenders are offering attractive rates for those with big deposits. 'Picture: Robert Perry

Lenders are offering attractive rates for those with big deposits. 'Picture: Robert Perry

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MORTGAGE lenders have trimmed more of their rates to rock bottom lows as the battle for homeowners’ business hots up in the run-up to Christmas.

On Monday, HSBC will launch its lowest ever five-year fixed-rate mortgage at 2.48 per cent for borrowers with a 40 per cent deposit willing to pay a £999 upfront fee.

Last month, the lender launched a mortgage with a rate of 0.99 per cent for customers with a 40 per cent deposit.

The 0.99 per cent deal is in ­effect a 2.95 per cent discount off HSBC’s 3.94 per cent standard variable rate (SVR), which lasts two years. From Monday, HSBC will also cut the booking fee on this deal by £500 to £1,499.

On Thursday, Santander launched its lowest ever two-year fixed-rate mortgage. Available only for remortgages, it ­offers a 1.84 per cent rate for a £995 fee on condition of at least 40 per cent equity. Santander said the deal will be available for “a limited time only”.

Barclays has also made some mortgage rate cuts this week, with its new deals including a five-year fixed-rate remortgage loan at 2.79 per cent for people with a 30 per cent deposit willing to pay a £999 fee.

A string of lenders have been slashing their rates since the start of autumn and mortgage experts predict more to come.

There have been some ­suggestions that lenders are looking to retain customers currently sitting on a standard variable rate (SVR) mortgage and who might jump to another deal when the Bank of England base rate eventually starts to climb, with expectations that this will happen towards the ­latter half of 2015.

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Meanwhile, there has also been evidence lenders are now playing catch-up in order to meet end-of-year lending ­targets.

Stricter mortgage lending rules came into force in April under the Mortgage Market Review (MMR) and this caused some disruption to the market as lenders adjusted to how they should interpret the changes.

A recent Bank of England report showed mortgage availability shrank back over the summer, just after the new rules were introduced.

Despite signs lenders are ­gaining a stronger appetite to offer home loans, concerns have also been raised that some people, such as the over-40s, are now struggling to get a mortgage deal.

Rachel Springall, for financial information website Moneyfacts, said that while HSBC’s 2.48 per cent deal is the lowest of its kind on the market at the ­moment, Yorkshire Building Society had offered a similar deal last year at 2.44 per cent.

Ms Springall said: “It’s fantastic to see a high street lender offering a market low rate of 2.48 per cent, it is likely to cause a stir in the market for long-term fixed deals.”

She added: “Customers sitting on an SVR or who are even coming to the end of their current deal will be looking at the best rates out there, so by offering a headline rate this deal is bound to attract custom. However, as with any mortgage, borrowers need to work out the true cost of the mortgage first.

“The fact that this deal is a five-year fixed will boost its appeal to borrowers who want to lock into a low rate for the ­longer-term.

“As the end of the year approaches, banks and building societies will be aiming to meet their lending targets, therefore it won’t be surprising if we see more of these low rates hit the market.”

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