HSBC extends first-time buyer mortgage price promise
The bank is opening up its pledge to be ‘first for first-time buyers’ to those with a 15% deposit.
HSBC has extended its bold mortgage price promise to a wider range of first-time buyers.
Now those with a 15% deposit as well as a 10% deposit will be able to take advantage of the bank’s pledge to match or beat the mortgage rates on offer from its high street rivals.
The mortgages
HSBC’s price promise is now linked to six of its leading deals. The 90% LTV deals include a two-year fixed rate at 3.59%, a five-year fixed rate at 4.39% and a lifetime tracker rate at 3.99%.
The 85% LTV deals include a two-year fixed rate at 3.19%, a five-year fixed rate at 3.89% and a lifetime tracker rate at 3.29%.
Each of these deals come with a £999 fee if you are an HSBC current account customer. Non-customers will have to pay a fee of £1,499 unless they open a HSBC current account.
How the price promise works
HSBC says it will either match or beat a competitor's rate. HSBC’s mortgage rates have to end in either a four or a nine (for example, a fixed rate of 3.19%). So if a competitor's deal ends in the same way it will be matched.
But if the rate doesn’t end with a four or nine HSBC will make its counter offer the next rate down that does.
For example, a challenger rate worth 3.58% on a two-year fix on a 90% LTV would be beaten by HSBC with an offer of 3.54%.
So HSBC's price promise could mean rates are forced as much as 0.04% lower than what you find elsewhere on the high street.
HSBC has said it will match or beat the rates on 90% and 85% loan-to-value deals with booking fees of up to £999. The bank will monitor rates and automatically offer the best rate compared to its high street rivals.
To apply you will need to go direct to HSBC as the bank does not offer its mortgages through brokers or intermediaries.
Use the lovemoney.com mortgage centre to compare the best home loans
Same catches
You may be able to pick from more mortgages, but the catches that come with this promise haven’t changed.
The HSBC price pledge still only applies to mortgages from Barclays, Woolwich, Halifax, Lloyds, TSB, Nationwide, NatWest, Royal Bank of Scotland and Santander, but excludes any of their subsidiaries.
HSBC says that’s because these lenders represent 81% of the UK mortgage market. So the HSBC promise will be able to match or beat four out of five providers on the price of 90% LTV and 85% LTV mortgages, but not all of them.
Another catch is that only the rate has the flexibility to change, not the fees that accompany it. So HSBC’s two tiers of fees, £999 or £1,499, are non-negotiable. However, HSBC has said that if a challenger had a lower fee and the same rate the bank might reduce the rate further in order to maintain its competitiveness.
Compare home insurance policies with lovemoney.com
Finding the best deal for you
HSBC is only promising to cover 81% of the market, which leaves plenty of other providers that could offer a better deal.
The Post Office, for example, has a two-year fixed rate of 2.89% on an 85% LTV mortgage which comes with a £995 arrangement fee. If you added the fee to the mortgage the monthly repayments for borrowing £150,000 would be £702.76.
With HSBC’s comparable 3.19% rate, with a £999 fee added to a £150,000 mortgage, you would pay £726.23 a month. Over the term of the deal HSBC ends up being £567.14 dearer.
The Post Office also has a better five-year fixed rate deal. Those with a 15% deposit can get a rate of 3.75% that comes with a fee of £995. Monthly repayments on borrowing £150,000 with the fee added in would be £771.20.
On HSBC’s comparable deal which charges 3.89% you would have to pay £782.67 a month. Over the term of this five-year deal HSBC ends up being £692.58 more expensive.
See the latest mortgage rates and get expert advice
This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
More on mortgages:
Second charge mortgages: pros and cons
The best long-term fixed rate mortgages
Comments
Be the first to comment
Do you want to comment on this article? You need to be signed in for this feature