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'Lowest' fixed-rate deal launched
HSBC has launched a five-year fixed-rate mortgage deal with a record low rate
Competition to attract mortgage customers has been stepped up as a lender launched a five-year fixed-rate deal with a record low rate.
The move from HSBC follows a string of lenders announcing increases to their mortgage rates amid the ongoing eurozone turmoil and economic uncertainty.
It also comes as comparison websites and building societies have reported surges in people looking to switch financial products following NatWest's IT meltdown and Barclays' Libor-fixing scandal.
Comparison website Moneyfacts said HSBC's new five-year fixed-rate of 2.99% is the lowest it has ever recorded for this type of mortgage.
Moneyfacts spokeswoman Rachel Springall said: "With the continuation of bad press with the high street banks, it is possible we will see an increase in competition in the attempt to attract new customers with decent offers."
Borrowers will need a sizeable 40% deposit or equity to take out the deal. HSBC is also offering a seven-year fixed-rate mortgage at the lender's lowest ever rate of 3.99%. Both products carry a £1,499 booking fee.
Lenders have been tightening their borrowing criteria in recent months and loans are expected to become even more hard to come by this year, especially for those who only have smaller deposits.
A spokesman for HSBC said the lender had not recently tightened its criteria and its lending strategy had always been "fairly conservative". He said: "People will certainly be able to get this rate."
The spokesman insisted the launch was not linked to the events in the banking sector over the last month and said it was part of the lender's long-standing goal to increase its share of mortgage customers.
Three years of record interest rates have enabled lenders to offer some of their cheapest ever deals, and Halifax found that average mortgage payments for new borrowers stood at 27% of disposable earnings in the fourth quarter of 2011, the most affordable level in 14 years.
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