HSBC cuts its mortgage rates

Last Modified: 08 Sep 2008
Source: PA News

HSBC became the latest lender to slash its rates as competition continued to increase in the mortgage market.

The group said it was reducing the cost of all of its fixed rate mortgages by between 0.46% and 0.72%.

The move, which comes just days after Abbey and Lloyds TSB cut their rates, follows a recent fall in wholesale funding costs.

The change will leave a two-year fixed rate mortgage for a borrower with a 10% deposit who pays a £799 arrangement fee at 5.97%, while the equivalent loan fixed for 10 years is being reduced by 0.72%, also to 5.97%.

HSBC is also shaving 0.05% off its lifetime tracker, giving a new rate of 5.94%, although it has introduced a £499 booking fee on the product.

Ten of the UK's 12 biggest lenders have now reduced their two or three-year fixed rate mortgage rates during the past two weeks, according to financial website Moneysupermarket.com.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "We are in the midst of a mortgage crisis, yet more than three-quarters of the nation's biggest lenders have recently slashed rates on deals.

"For such a significant proportion of mortgage providers to drop their rates underlines an industry wide recognition that rates were too high.

"Sadly, as is so often the case though, the good news is restricted to customers with a spotless credit rating and a large deposit - most commonly around the 25% mark."

She added that lenders were cherry picking which customer to offer the lowest rates to, further widening the gap between the "haves" and the "have nots" in the UK.

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