HSBC says it has lent all the funds allocated to the 2.99% five-year deal, but other lenders remain in the market
HSBC is to withdraw the 2.99% fixed-rate mortgage which started a price war over five-year deals when it was launched just four weeks ago.
At the time the deal, which was offered to borrowers with at least 40% to put down as a deposit, was the lowest five-year fix that had ever been offered in the UK, but other lenders followed suit with a flurry of similar deals.
Santander matched the rate, also charging a £1,495 arrangement fee, then NatWest beat it with a 2.95% five-year fix. The fee on the latter deal is £2,495. Nationwide responded with a four-year fix at 2.89%.
HSBC said it would withdraw the loan at the close of business on 16 August because it had lent all the funds allocated to the deal. A spokeswoman said the bank had expected the mortgage to sell quickly: “It was designed to bring in business – we knew it would be popular.”
The bank still offers a five-year fixed-rate at 3.29% with a £499 arrangement fee.
Santander said there were “no immediate plans” to withdraw its rate, while NatWest said its loan was still available.
Elsewhere, lenders have continued to cut rates on mortgages for borrowers with sizeable deposits. Barclays has reduced its two-year fix for borrowers with a deposit of at least 40% by 0.2 percentage points to 2.89%. The application fee is £999, although those who qualify for a loyalty mortgage will pay just £499.
The bank’s Future Fix deal, a five-year mortgage which starts as a two-year tracker then reverts to a three-year fix, is now 0.3 percentage points cheaper during the tracker period. The rate is base plus 2.49%, which is currently 2.99%. This also has a £999 application fee and is available to anyone with at least a 30% deposit.
Virgin Money, meanwhile, has reduced rates on its two-, three- and five-year fixed-rate deals for borrowers with at least 30% to put down as a deposit.
It has cut the rate on its two-year fix to 2.89%, with a fee of £995, or 3.29% with no arrangement fee. That is available for borrowers with a 40% deposit. Those who want to borrow 70% of a property’s value will also see price cuts: the two-year fix is reduced to 3.15% with a £995 arrangement fee or 3.55% without.
Virgin has also reduced the rate on its two-year fixed-rate buy-to-let mortgage, cutting it by 0.2 percentage points to 3.79%. This deal has a £1,995 arrangement fee and is available up to 60% loan-to-value.