Cheapest mortgage deal on record is scrapped by HSBC

December 13, 2016 by Brendan O'Neill

Rates

HSBC has withdrawn the fixed rate deal which was reportedly its cheapest ever. The lender has also increased the interest rates on its other deals.

In June this year, HSBC offered a two-year fixed rate deal at 0.99%. However, this deal has been scrapped and other deals are around 0.5% higher. This follows a warning from mortgage brokers that the cost of fixed rate mortgages would increase due to a number of factors, including Brexit and Donald Trump securing US election victory.

According to a broker from London and Country Mortgages, David Hollingworth, this move may mean the end of fixed rate deals which are below 1%, and could also mean that others will increase.

A spokesperson for HSBC said that when the cost of borrowing for the lender was low, it had passed on those savings to customers with a low fixed rate deal. However, now that the swap rates have increased, the lender has had to raise its lending rates. The spokesperson did say that future savings would also be passed on to customers.

The Council of Mortgage Lenders stated that mortgage affordability was at its lowest ever point, with 17.8% of a first time buyer’s income being spent on mortgage repayments. The recent increase in swap rates, which occurred following Donald Trump’s presidential election victory, has resulted in HSBC reviewing the deals on offer and making necessary adjustments, which other lenders may also do.

Mortgage advisers study on a CeMAP course, so that they are able to calculate the best value deals for a borrower, as the lowest interest rate may not always be suitable.