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HSBC's 1.99% mortgage deals isn't best deal for many borrowers

Ed Bowsher
by Lovemoney Staff Ed Bowsher on 11 March 2010  |  Comments 1 comment

HSBC's decision to relaunch its 1.99% mortgage will deliver a welcome boost to the mortgage market. But it won't be the best deal for many borrowers.

I put out the following press release on HSBC's new 1.99% mortgage this morning. It's pretty self-explanatory really, so I thought I'd publish it here unchanged.....

HSBC’s 1.99% MORTGAGE DEAL ISN’T BEST DEAL FOR MANY BORROWERS, SAYS LOVEMONEY.COM

For immediate release on March 11th, 2010

HSBC’s decision to relaunch its 1.99% mortgage will deliver a welcome boost to the mortgage market. But it won’t be the best deal for many borrowers.

Ed Bowsher, lovemoney.com’s head of consumer finance comments: “The return of HSBC’s 1.99% mortgage is great news for the mortgage market. When HSBC launched a similar deal last September, it really shook things up. Second time around, the deal is even better as the fee is £200 lower at £999.

“However, I expect that HSBC will once again use the super-low rate as a bait to cherry-pick the best borrowers with perfect credit scores. Borrowers will also need a minimum 40% deposit. So if you apply for this deal, there’s a good chance you will be turned down.

“What’s more, the 1.99% rate is linked to HSBC’s standard variable rate (SVR). HSBC could raise its SVR at any time - even if the Bank of England’s base rate stays static at 0.5%. So there’s no guarantee that the rate on this mortgage will stay low for long. A fixed-rate mortgage will be a better option for many people.

“Some borrowers may be tempted to go for a 2-year tracker mortgage from Alliance & Leicester. Its rate is even lower at 1.84%, but borrowers will be hit by a very high 2% fee.”

-Ends-

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Comments (1)

  • toxicchili
    Love rating 0
    toxicchili said

    I don't see a major issue with banks offering decent rates to people with large deposits and good credit ratings. Seems fair. It sure beats what happened during the boom when banks like northern rock offered 125% mortgages to people who had been bankrupt only a few yeasrs earlier.

    One of the irish banks really took the biscuit though offering a 100% mortgage on 9 times your income lol, would that actually leave anything left to live on? I guess if you have bricks and mortar you don't really need food.

    Report on 25 March 2010  |  Love thisLove  0 loves

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