HSBC launches 90% mortgage
HSBC has launched a 90% loan-to-value (LTV) mortgage in an effort to help out first-time buyers.
There is a booking fee of £599 and the mortgage rate is fixed at 4.49% for two years, giving homeowners the security of knowing exactly what they'll have to pay for the term.
This deal runs alongside an existing 90% mortgage from the bank on a two-year discount of 3.84%, with no fees to pay. The difference with this deal is that the mortgage is variable and will revert back to the standard rate, currently 3.94%, after the two-year period.
The next best deal for first-time buyers, according to Moneyfacts, comes from Loughborough Building Society and is a three-year fixed-rate deal set at 3.99%, with a fee of £499.
"Owning a home is still an aspiration for many. We will continue helping make that dream a reality with a range of products that assist those with relatively small deposits get onto the property ladder," says Peter Dockar, head of mortgages for HSBC.
Weak demand from first-time buyers has been blamed for holding back the housing market as potential homeowners are unable to save enough for a deposit and are worried about unstable economic conditions.
This new mortgage is a good sign and provides homeowners with the security of knowing exactly how much their outgoings will be and is suitable for anyone who doesn't want to fix their mortgage payments for a long period. However, it's important to take note of the £599 fee, which doesn't exist with the bank's existing variable-rate deal.
These deals are a positive sign that mortgage providers are willing to address the problems first-time buyers face and hopefully other lenders will follow suit with similar offers.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.