HSBC launches country's lowest ever mortgage rate - if you have a 35 per cent deposit

The bank is offering a mortgage package with an interest rate of less than 1 per cent, raising concerns of a return to riskier lending practices to try to boost flagging profits.

HSBC, Europe’s largest bank, is offering customers the chance to borrow money at a fixed interest rate of 0.99 per cent for two years, provided the borrower can lay down a 35 per cent deposit.

Moneyfacts, a consumer website, said the HSBC product was the lowest offered since it began recording product rates.

Faced with record-low interest rates, rival lenders and increasingly trying to to steal more market share, with Lloyds, Barclays and Royal Bank of Scotland all signalling aggressive lending ambitions in the search for profitability.

HSBC denied the product represented a return to riskier lending, saying customers needed a large deposit to be approved.

Lucian Cook, UK head of residential research at property services firm Savills, said the product would have limited benefit for many aspiring homebuyers struggling to get on the property ladder.

“The 35 per cent deposit requirement risks widening the gap between those with and without housing equity. In any event, those accessing this deal will need to plan carefully to ensure they do not risk being overstretched at the end of the two year period.”