One major provider of personal and business loans has recently announced the launch of a new mortgage offering with an interest rate of less than 4 per cent for first time home buyers, claiming its the first of its kind in the UK.
Borrowers who deposit between 10 per cent and 15 per cent of the cost of their new home can now avail themselves of the a 3.84 per cent rate for the first two years of their mortgage from HSBC. This is a full 0.1 percentage points reduced from the personal and business bank account provider’s 3.94 per cent standard variable rate, though after the two years has expired, borrowers will be moved to the higher rate.
While lowered rates even for only two years is usually cause for celebration, industry experts point out that the bank’s SVR is not a stable entity, which could spell disaster for first time home buyers. Mortgage costs could increase if the bank ever made the decision to alter its SVR – and HSBC is entitled to do so whenever it may wish, though bank officials are quick to point out that the new HSBC deal has no fees of any kind.
Industry experts say that if you’re a first-time buyer that wishes to rest secure in the knowledge that your monthly repayments will remain unchanged for the entire term of your mortgage, you may wish to find a deal with a fixed rate. Tracker mortgages could also be attractive options, experts added, as the Bank of England’s base rate is only 0.5 per cent currently, and these types of mortgages are tied to that base rate.