Industry observers are suggesting that there could be a war between mortgage lenders over rates, as further loans offering rates of less than 1% hit the market.
Nationwide and HSBC have now joined the fray with loans featuring ultra-low rates. The latter has reduced its two-year fixed product rate in an offer available to those who have deposits or equity worth a minimum of 40% by 0.05 points. This leaves a 0.99% rate on the product, making it the first HSBC loan to offer a rate that low in five years.
The Nationwide offer is identical in terms of the rate, the product and the type of borrower it is available to. The only difference is that its fee is higher, at £1,499, compared with £999 for HSBC.
These two reduced-rate products come in the wake of a similar move by the Platform mortgage arm of the Co-operative Bank, although that product offers borrowers an even lower 0.95% rate.
Speaking to FT Adviser, Quilter’s Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Expert Karen Noye said:
“The rate war at the moment between these big lenders is likely caused by them trying to balance the risk profile of their books. Such deals encourage these lower risk borrowers (with larger deposits) into the marketplace.”
Rachel Springall from Moneyfacts warned that such deals tend to be short-lived, however, and that many borrowers would be excluded, making professional advice essential for them.
CeMAP training will enable advisors to identify quickly whether their clients are eligible for these deals and to find potential alternatives.