HSBC has launched a new best buy with a five-year fixed loan of 3.81 per cent – but the deal is not available to all homeowners.
It is a purchase only deal and customers will have to have a Premier account with the bank which is only available to those with an individual annual income of at least £75,000 and either a mortgage, investment, life insurance or a protection product with the lender.
Alternatively, they will have to have savings or investments of at least £50,000.
Homeowners will also need a deposit or equity in their home of at least 40 per cent while their income will also need to be paid into the account.
As a result, many people will be unable to benefit from the rate.
However, the bank’s five-year fix for those without a Premier account is only 0.03 per cent more expensive and it has a lower arrangement fee.
Nick Mendes of brokers John Charcol said: “HSBC’s recent repricing move comes as no surprise, following similar actions from other major high street lenders.
“Given the competitive nature of the mortgage market, it was only a matter of time before HSBC adjusted its rates in response to the broader market trends.”
Aaron Strutt of brokers Trinity Financial added: “The 3.81 per cent fix is a best buy at the moment but the rate is only available to HSBC Premier customers.
“Many of the bigger lenders are still lowering their rates which is good news for borrowers. Barclays, Nationwide, NatWest and HSBC seem to be fighting it out to offer the cheapest deals.
“The lenders are still pushing their property purchase fixes so many of the remortgage options are a fair bit higher.”
Barclays has a similar policy and it also tends to offer its cheapest rates to Premier Customers.
Otherwise, NatWest offers the best deal of 3.83 per cent with a £1,495 fee. Nationwide also offers the same rate but with a £1,499 fee. However, both also require a high deposit or equity.
Lenders have been cutting rates in recent weeks in a bid to win more customers.
They have been spurred on by the Bank of England introducing the first base rate cut in four years earlier this month, reducing interest rates from 5.25 to 5 per cent.
Fixed mortgage rates tend to fall as swap rates – based on long-term predictions for where the Bank base rate will go in the future – decrease.
TSB has cut its two-, three- and five-year rates by 0.25 percentage points.
Barclays also trimmed 0.15 percentage points off many of its rates this week.
It means a two-year fixed deal, for those with a 15 per cent deposit, has fallen from 5.22 to 5.07 per cent.
Despite most of the rates benefiting homeowners with large deposits or equity in their home, Virgin Money introduced a rate of 3.84 per cent for those with a deposit of just 25 per cent.
It is hoped more lenders will offer deals for the wider market.
Experts told i they think mortgage rates could fall to as low as 3.5 per cent by the end of this year.
There are three more interest rate setting-meetings left this year which could influence how much rates fall by.
Economists have suggested it is unlikely there will be another interest rate cut in September, although they could come down later in the year.
