Over the past few weeks a number of lenders have been launching new fixed rate mortgage deals with competitive rates of interest, and this follows the base interest rate plunging to a fresh record low of just 1 percent, which was announced after the February Monetary Policy Committee meeting.
Over the past five months the base rate has plunged from 5 percent in October to just 1 percent in February, which is the lowest level in the three hundred and fifteen year history of the Bank of England.
One of the major lenders that has launched some competitive fixed rate deals in response to the base rate cuts is HSBC. The bank has recently launched two new fixed rate deals with very competitive rates of interest, according to recent reports. The mortgages can be fixed for either five or ten years depending on the borrower’s needs and preferences. The five year fixed rate mortgage deal has been made available at an interest rate of 3.99 percent, and the ten year fixed rate deal is available at 4.98 percent.
However, there is a catch. Like many other competitive mortgage deals that have come onto the market from a range of different lenders the two fixed rate mortgage deals are only available to those that have a hefty deposit that they can put down, which means that lower income households, first time buyers, and those with little equity in their existing homes will not benefit.
Borrowers that want to opt for one of these mortgage deals must put down a deposit of at least 40% percent of the property value.
An official from HSBC said that the demand for fixed rate mortgage deals was on the up, as consumers were not aware that the base rate would soon be at rock bottom. He said: “Base rates don’t have much further to fall, so demand for longer term fixed rate mortgages is increasing.”
