HSBC Mortgage Rates Drop Below 4%
HSBC mortgage rates have truly smashed their competition to smithereens by introducing a product with an interest rate as low as 3.81%. Although not currently the absolute lowest rate on the market, HSBC has beaten many other high street banks so far in the rate war that I have been observing closely over the last few weeks and months. Since probably 2022 I have been watching rates like a hawk, waiting for a little hint that rates would be coming down significantly, and now we are finally starting to see some promising trends of lenders introducing sub 4% mortgages. In this article, I will be using my expertise in the UK mortgage market to explore the new products available from HSBC, and what this could mean for UK mortgage customers.
HSBC Mortgage Rates At 3.81%
A week or so ago, this update from HSBC would have been even more significant, however Nationwide leapfrogged HSBC by introducing a mortgage product at 3.78% earlier last week. Nonetheless, this product introduced by HSBC is the next lowest rate in the UK so far, and one of only a small handful of products from UK banks and building societies that are below 4% interest rates. Arguably starting with the disastrous mini budget introduced by former short-lived Prime Minister Liz Truss and equally short-lived former Chancellor Kwasi Kwarteng, mortgage interest rates have been frankly through the roof! When I started working in mortgages, it was not uncommon to be able to secure a mortgage interest rate of below 2%. However, in around 2022 interest rates had sky rocketed to as high as 8% in many cases and probably around 6% on average.
This remained the case for a number of months and even years before economic stability started to have more of an effect. Rates began to come down, and suddenly a rate of 5% seemed much more palatable! We then experienced a period of time where rates fluctuated between 4% and 5% and many of us thought that this might be the new norm. However, as I told the Evening Standard in June 2024, I always expected that significant rate reductions would be on the horizon. And I was right. We are now seeing many UK mortgage lenders dropping rates, with a handful actually breaching the 4% mark, and offering rates as low as 3.81% in HSBC’s case.
HSBC Mortgage Rates – 60% LTV
Although not available to borrowers with less than 40% deposit, HSBC now offers a product at a amazingly low rate of 3.81%. This product comes with a £1,499 fee and must be fixed for 5-years. Let’s examine some figures to see what the significance of this rate is on an average borrower. Firstly, let’s look at a similar 5-year fixed rate at 60% LTV from a generic lender on a purchase price of £300,000.
- Purchase price: £300,000
- Deposit: £120,000
- Mortgage: £180,000
- Term: 30 years
- Rate: 4.69%
- Payment: £932 p/m
Now let’s look at the same scenario with the new HSBC mortgage rate of 3.81%:
- Purchase price: £300,000
- Deposit: £120,000
- Mortgage: £180,000
- Term: 30 years
- Rate: 3.81%
- Payment: £840 p/m
Almost £100 a month saved or £1,200 per year. It might seem like a relatively small amount, but this has the potential to make a big impact on many borrowers’ finances. For the five years that you have this rate secured, you will have saved £6,000 in interest. Not too shabby, really. In my opinion, lenders battling it out to have a lower rate can only be a good thing. The more lenders we have on the market with sub 4% interest rates, the more stimulated the property and mortgage market will be. Buyers are returning to the market, especially first-time buyers, and lower interest rates and cheaper borrowing will only have a positive impact.
Talk To A Low Rate Mortgage Advisor
At Oportfolio Mortgages, we are whole of market mortgage brokers. What does this mean? It simply means that we have access to every mortgage product and every lender in the UK mortgage market. Which means that we can give our clients the best advice on their mortgage, and offer the most competitive lender and rate for their unique scenario. If you or anyone you know is looking to buy a property to live in, remortgage their current home, or looking to invest in a buy-to-let property, then please feel free to get in touch with our team of experienced mortgage professionals. We are here to help.
