Mortgage war hots up as HSBC launches lowest fixed-rate deal

The battle between lenders to chop down mortgage rates has intensified, with one provider unveiling a new five-year deal with a record low rate.

(AP Photo/Vincent Yu)

HSBC said it will launch a five-year fixed-rate mortgage with a rate of 1.99 per cent.

However, borrowers must have a 40 per cent deposit to take out the deal, which also comes with a booking fee of £1,499.

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Charlotte Nelson, a spokeswoman for financial information website Moneyfacts, said it is the first five-year fixed-rate mortgaged the site has ever seen in its records from 1988 onwards.

According to Moneyfacts, the average rate on a five-year fixed rate across all deposit sizes is now 3.55 per cent, having fallen from 4.04 per cent a year ago. Five years ago, the average five-year fix came with a rate of 5.87 per cent.

Other mortgage lenders which have been cutting their rates recently include Tesco Bank, which said it is offering some of its lowest ever rates, and Yorkshire Building Society.

Yorkshire Building Society currently has a two-year fixed-rate deal for people with a 35 per cent deposit at a rate of 1.18 per cent, which it said is the lowest rate it has ever offered.

The deal comes with a fee of £1,369. It also offers a 1.29 per cent two-year fixed rate for people with a 35 per cent deposit with a lower product fee of £845.

Meanwhile, Norwich and Peterborough Building Society is offering a 1.64 per cent two-year fixed rate with a £195 fee to borrowers with a 35 per cent deposit.

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