HSBC has launched a new sub-4 per cent mortgage, despite many lenders pulling their best deals. However, there is a catch.
Customers looking to take advantage of the five-year fix at 3.98 per cent will need an annual income of £100,000 or over and be a Premier customer with the bank.
Aaron Strutt of brokers Trinity Financial said: “While the rate is really good, it is not going to be as widely available to borrowers because of the high minimum income qualification requirement.
“The good news is that HSBC’s move shows the lenders can still offer really cheap mortgages despite the ongoing uncertainty driven by inflation and mixed messaging about the number of base rate cuts we will get this year.”
The deal comes with a £999 fee and is available for first-time buyers with a 40 per cent deposit.
The remortgage rate is marginally higher at 3.99 per cent.
To qualify as a premier customer applicants will need to have an individual annual income of at least £100,000 and pay it into an HSBC Premier bank account or have savings or investments of at least £100,000 with HSBC in the UK.
It comes after a slight increase to mortgage rates in the past week after an initial drop earlier this year.
Many lenders increased the price of their rates after inflation rose from 2.5 per cent to three per cent and swap rates – which are used by lenders to price their mortgages – rose.
Higher inflation means the Bank of England could consider keeping interest rates higher for longer, with traders betting there is little chance that it will cut rates in March.
And experts said that this, coupled with higher-than-expected wage growth in figures released last week, could mean the best deals on the mortgage market start to disappear and cheaper ones do not appear as quickly.
Santander’s five-year fixed rate at 3.99 per cent was removed last week and is now 4.06 per cent.
However, Barclays still offers its five-year deal at 3.99 per cent and there are still a selection of lenders offering five-year fixes around 4.1 per cent.
The average two-year fixed rate is 5.39 per cent, according to Moneyfacts, while the average five year is 5.22 per cent.
If your mortgage fix is coming to an end soon, it is worth starting to look at new deals around three months in advance.
Most lenders let you lock in a new deal several months before you need it to start, so you could currently lock in a rate now even if your deal ends in May.
Then, if rates rise, you have a cheaper deal locked in, and if rates do end up going down, you can switch to a cheaper deal.
Another option is to go for a tracker mortgage, which will go down if the Bank of England base rate does, and up if the Bank raises rates.
These are usually more expensive than fixes, but they do allow customers to bide their time before locking in a fix, which may get cheaper in the future.
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