HSBC extends 1.99% mortgage offer

HSBC has announced that is has extended the deadline on its 1.99% two year discount mortgage, which will now remain available until the end of October.

The mortgage, which was launched on 1st September, prompted a leap in consumer interest in HSBC mortgages and led to a total of £245 million of discount mortgages being sold during September alone.

To qualify for the low 1.99% rate, customers must limit their borrowing to 60% of the property value and pay a £1,199 arrangement fee. For 75% loan to value (LTV) the rate rises to 2.49% and for 90% LTV it rises to 3.89% and is only available for home purchasers – not remortgage.

Martijn van der Heijden, head of mortgages at HSBC, said:

“Our range of mortgages have topped the best buy tables for most of the year. We made a commitment to stay open for business and extending the 1.99 per cent mortgage is part of that.”

Last week HSBC announced that is making an additional half a billion pounds of mortgage funding available to homebuyers with deposits of just 10% (90% LTV). The bank has now reached the £1 billion it committed to lending earlier this year, meaning HSBC will now make £1.5 billion available to home buyers requiring 90% LTV in 2009.

Commenting on HSBC’s announcement of further lending to first time buyers, Hannah-Mercedes Skenfield, mortgage spokesperson at moneysupermarket.com, said:

“HSBC’s commitment to further lending to first time buyers is an indication of its belief in this part of the market. Throughout the credit crunch HSBC has been one of the most visible players in the mortgage market, offering a range of market leading rates when others were shying away from lending altogether.”

“The last year has seen lenders place far too much emphasis on equity over affordability, and so it is encouraging to see HSBC grow its 90 per cent LTV lending book. Our data shows that HSBC is currently the cheapest 90 per cent LTV lender in the market – though its fee is larger than most of the competition, so it is not surprising they’ve already leant £1bn at 90 per cent LTV so far this year.”

“This kind of positive news is crucial as the mortgage market enters a critical phase. With the Bank of England figures showing a decrease of mortgage approvals in August, it is clear that the recovery of the housing market is by no means a foregone conclusion. The main issue continues to be supply rather than demand, with too few lenders opening the purse strings at a reasonable rate.”

“With the Base Rate still at 0.5 per cent and LIBOR hovering around the same mark, one might expect lenders to be offering better deals for first time buyers, but they just don’t seem willing.”

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