HSBC launches sub-4% five-year fixed rate

HSBC has launched a new five-year fixed rate remortgage product below 4%, the first since early October after the mini Budget.

Related topics:  Mortgages
Rozi Jones | Editor, Financial Reporter
7th February 2023
hsbc sign
"Despite base rate continuing its upward trajectory fixed rates have been falling and borrowers are now faced with a very different picture."

The reduction in fixed mortgage rates continues with the launch of the first five-year fixed rate below 4% since the mini budget sent rates rocketing in September.

HSBC has repriced its range and introduced a new five-year fixed rate for remortgages at 3.99% to 60% LTV with a £999 fee.

Last week, Virgin launched a sub-4% 10-year fixed rate mortgage. The rate of 3.99% is available up to 75% LTV with a £995 product fee.

A recent L&C Remortgage Tracker showed that the average of the top ten lenders’ lowest two and five-year fixed rates have dropped by more than 1.20% between November and the end of January.

David Hollingworth, associate director at L&C, commented: “The thought of being able to fix at a rate lower than base rate would have sounded like dreamland in recent months. But despite base rate continuing its upward trajectory fixed rates have been falling and borrowers are now faced with a very different picture.

"Although those coming to the end of a fixed rate taken during the low in rates of recent years, will still be faced with higher payments than they have been used to, it’s a far cry from the prospect of rates at 6% or more.

"These deals are beginning to offer rates that many may have feared were headed for extinction. Those borrowers that understandably decided to sit on their hands when rates went through the roof last October, should now seriously consider if it’s time to take advantage of these significant improvements.”

Imran Hussain, director at Harmony Financial Services, said: "HSBC have thrown their hat in the ring in their pursuit of the best borrowers. However, it's worth noting is that this is a remortgage product for those with 40% equity in their property, so great to grab headlines as it undercuts the Bank of England's base rate, but it's aimed at specific borrowers, and it may be here today and gone tomorrow."

Chris Sykes, technical director and senior mortgage adviser at Private Finance, commented: "We have needed a good news story for a while and this is a great opportunity to put one out. Some clients are still thinking rates are in the 5%-6%s and there is a lot of misinformation out there about this. With SWAPs reducing last week following the base rate decision, especially on longer term money like five-year fixes, lenders have more scope to do this. We suspect HSBC will not be the only lender to introduce rates like this for cream of the crop business. It is rare to get fixed rates under base rate."

Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial, added: "HSBC are always keen to be top of pops on mortgage pricing and this puts them there again. Mortgage pricing has been fierce competition over the last six weeks and rates still seem to be coming down. Moving into the Spring I expect rates to creep up again as economic news may force up the UK government borrowing rate that mortgages tend to use for pricing."

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