New 2 year discount mortgage from HSBC

HSBC has launched a new discount mortgage at a fantastic low rate of 1.99%.

As a discount mortgage the interest rate is linked to the HSBC Standard Variable Rate (SVR), currently 3.94% and discounted by 1.95%.

If the HSBC SVR increases then so too will the interest rate on the discount mortgage.

However, at 1.99% this is the cheapest mortgage deal currently available and is expected to result in responses from other mortgage providers.

The discount mortgage is only available for up to 60% LTV, meaning a minimum 40% deposit is required.

There’s a £1,199 booking fee.

As Hannah-Mercedes Skenfield of moneysupermarket.com comments ‘HSBC has really broken new ground with its sub-two per cent mortgage deal, the first time we have seen rates fall this low in the market.’

She added though ‘With Bank of England Based Rate at an historic low, it is good to see rates dropping, but there is still a wide gap between average mortgage rates and Base Rate compared to 12 months ago and lenders need to do more to bring their rates down.’

It will be interesting to see if and how the other mortgage providers respond.

If you don’t have the 40% deposit, HSBC have also launched a 25% LTV 2 year discount mortgage at 2.49%.

For home purchase there’s also a new 3 year discount mortgage available at 90% LTV at an interest rate of 3.89%.