HSBC has cut the interest rate on its two-year fixed-rate contract for those with a 40 percent deposit to 0.94 percent, the cheapest home loan it has offered worldwide, while smaller rival TSB is offering the same down payment to customers who rescheduled at 40 percent.
It is the latest phase in a mortgage price war between banks as competition for preferential rates intensifies and for many the prospect of real estate is on the table.
“Right now there is a clear sense of competition in the mortgage market – people are being stimulated to act, whether it’s real estate agents trying to build their offering or lenders trying to build their book,” says Tom Bill. Head of UK Residential from London Research at Knight Frank.
“I had [approaches] through my mailbox in the past two days from agents asking me if I was thinking of selling.
“London will lag the rest of the UK in terms of price growth, it will continue to underperform and there will be fewer discrepancies with London and the rest of the country in terms of transaction volume going forward. The escape into the country is still very real, the space race is still real, but it has probably reached its climax. “
The recent deals by HSBC and TSB are the lowest in the UK on record, according to analyst Moneyfacts, and the downside credit race is expected to continue.