HSBC has come up with a new concept in mortgages this week as it is offering a new ‘Rate Matcher’ product, although it will cost some borrowers up to £4,699 in fees.

The mortgage lender is offering to match the low standard variable rate (SVR) being offered by other mortgage lenders but the offer comes with the change to lock into that SVR for up to five years.

The bank says it is hoping this will help really revive the mortgages market and there will certainly be some that choose to remortgage with this deal. The number of remortgages has dropped as borrowers are reluctant to move off such low variable rates.

Current low SVRs include 2.5% from Nationwide and Cheltenham & Gloucester and 3.5 per cent from the Halifax. However, to remortgage many of their borrowers would have to double that interest rate in order to fix their rate for only three or five years.

The new Rate Matcher deal is available from next Monday for a limited period only and to qualify, borrowers must have at least 25 per cent equity. The fee structure however is rather complex and means it may not be the right option for some people.

For those doing CeMAP training, this is an interesting mortgage concept to understand. Many members of the public would need to consider this mortgage deal carefully because the fee depends on the LTV, the SVR HSBC have to match and the size of the mortgage. Naturally, the better your deal is the higher the fee would cost.

There are other complications such as each fixed period, whether two, three or five years, has a different minimum interest rate and you must be borrowing less than £250,000.

For those already locked into a deal, HSBC is offering a six month drawdown facility and thus opening the offer to more borrowers.

According to HSBC, this is a good deal for many ‘typical borrowers’, saying:

“A homeowner borrowing an average loan of £120,000 can get a rate of less than 3pc for a fee of under £1,000, provided they have adequate equity in their home.”

Martijn van der Heijden, the head of mortgages at HSBC said: “With the Bank Rate at a historic low it’s definitely a case of ‘when’ not ‘if’ mortgage rates will rise. It is in the interest of the millions of home owners enjoying exceptionally low mortgage payments to think ahead now and ask themselves by how much would rates need to rise to seriously impact their lifestyle.”

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