World Economy

HSBC Offering 0.99% Mortgage Rate in UK

HSBC Offering 0.99% Mortgage Rate in UKHSBC Offering 0.99% Mortgage Rate in UK

HSBC has broken mortgage records by offering UK customers a two-year fixed rate home loan at an interest rate of 0.99%, underlining the difference between the rates Irish homeowners are paying on their mortgages versus their European peers.

Indeed HSBC has launched the product despite a higher base rate in the UK of 0.5%, compared with a rate of 0% in the eurozone, Yahoo reported.

The move means that a homeowner in the UK servicing a €250,000 ($282,043) mortgage over 30 years will have monthly repayments of just €802.95 thanks to the low mortgage rates.

This compares with a repayment of €1,067 a month for an Irish homeowner on the lowest rate available on the Irish market of 3.1%. An Irish property owner on a rate of 4% on the other hand, will have a monthly repayment of €1,193, or almost €400 more a year.

David Hollingworth, director at broker London & Country Mortgages, said HSBC was making a statement by breaking through the 1% barrier. “It’s a new low for a fixed rate.”

Rate cuts may follow as other lenders look to respond, he said. “It will be interesting to see whether other lenders can manage to match them.”

The lender already has another benchmark in the five-year fixed rate mortgage market, which it currently offers at 1.99%.

The deal is available on loans of up to £500,000 and allows annual overpayments of up to 10% a year. However it carries a relatively high fee of £1,499 to arrange.