Brokers sceptical as HSBC unveils its lowest ever mortgage at 1.99%

7 September 2009

The bank is offering the two-year discount deal at 60% LTV as well as a two-year discount product at 75% LTV with a rate of 2.49%.

Both deals have arrangement fees of £1,199 and are discounted from HSBC’s SVR of 3.94%.

But Andrew Montlake, director, of Coreco, says: “This is another headline-grabbing mortgage rate from the HSBC machine but borrowers shouldn’t get excited.

“As ever, the headline is only part of the story. Fees, flexibility and service are equally important. I’d prefer to see lenders offering products with realistic criteria rather than distort the market.”

He adds: “HSBC’s tactic is to create a buzz, take in as many applications as possible and embark on a ruthless cherry-picking exercise whereby it only lends to those it deems worthy.”

But a spokesman for HSBC says it announced in its half-year results that it accepts more than 70% of mortgage applicants and it stands by that claim.

HSBC has pledged to double its 2007 level of mortgage lending this year and has made £15bn available to customers. It was the largest net mortgage lender in the country in the first half of 2009, with £4.2bn in new lending.

Martijn van der Heijden, head of mortgages at HSBC, says: “Across the market, lenders’ SVRs are at an all-time low and that’s why we are launching our lowest ever mortgage rate at just 1.99%. We hope it will appeal to remortgagers.”

He adds that the lender has also reduced rates on its higher LTV mortgages to help first-time buyers and those moving home.

Ketan Yadav, director at Avenue & Co Private Finance, says: “HSBC is offering the best remortgage rates for 60% LTV products because it doesn’t take on risky customers.

“Its aggressive pricing strategy will increase its market share as it shows how to successfully distribute mortgages without brokers.”