A spring mortgage war has broken out, with lenders offering record low deals to help boost the resurgent property market. Experts urge borrowers to act quickly as the funds are limited and offered on a first-come, first-served basis.
HSBC has launched its lowest-ever two-year fixed rate loan at 1.79 per cent, and is also offering competitive five-year and 10-year fixes at 2.78 per cent and 3.99 per cent respectively.
Borrowers need to put down a 40 per cent deposit, which rules out most first-time buyers, and there is a £1,999 booking fee.
Other lenders are following suit. Norwich & Peterborough building society, Chelsea building society and Yorkshire building societies have all launched deals at less than two per cent.
In general, fixed-rate deals are now cheaper than variable rate loans. While two-year fixes are the cheapest options, advisers say borrowers who want “rate security” should consider longer-term deals. According to broker John Charcol, the best five-year fixes are offered by the Post Office - 2.74 per cent at 60 pc loan-to-value and 3.04 per cent at 75 per cent loan-to-value.
Four years ago this week the Bank of England set the base rate at 0.5 per cent and it has remained at this record low ever since. But what is good for borrowers is bad for savers - deposit rates are at an all- time low too. Switching to market-leading deals and maximising your tax-free ISA allowance makes for sensible money management.
Three out of four people do not use their tax-free savings allowances, according to Virgin Money, which has launched an inflation-beating ISA paying 2.75 per cent. Visit virginmoney.com/savings.