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First fixed rate deal falls below 1%

The first fixed rate deal that falls below 1% has recently been introduced to the mortgage market. As lenders benefit from cheaper borrowing, new low fixed rate deals are becoming available to buyers. The latest deal to arrive on the market is fixed for two years, at just 0.99%.

The first fixed rate product below 1% has been introduced by HSBC. However, buyers will need a deposit of 35% and will be charged a fee of £1,499. According to mortgage broker David Hollingworth of London and Country, the monthly repayment for a mortgage of £150,000 would be £565. Moneyfacts state that it is the lowest rate deal they have recorded.

Yorkshire Bank recently launched a low rate deal, fixed at 1.14%, with a lower fee of £1,345. The financial expert at Moneyfacts, Rachel Springall, said that mortgage applicants needed to calculate the true cost of the deal to decide whether it is the most suitable for them.

Hollingworth pointed out that HSBC’s new deal was only slightly lower than its five year fixed rate deal, which is set at 1.99%. Over the longer term, the five year fixed rate product may work out to better value.

Furthermore, Hollingworth went on to add that the deal may not be on offer for long, as funds will be limited. The Bank of England base rate has been the same since 2009, but lower borrowing costs for lenders have ensured that cheap deals are still available for buyers. Mortgage advisers are required to pass the CeMAP exam so that they are able to advise buyers about the mortgage market.

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