HSBC mortgage applications double

HSBC today said its mortgage applications had doubled during February as it launched two new longer-term fixed rate deals.

The group attributed the doubling in application requests from levels recorded during the previous month to the introduction of its 2.99 per cent two-year fixed rate mortgage.

It also announced that from tomorrow it will offer a five-year fixed rate deal at 3.99 per cent and a 10-year one at 4.98 per cent - both of which will go to the top of the best buy tables.

But the mortgages are only available to people who have at least a 40 per cent deposit, with the rate for the five-year fixed rate loan rising to 4.99 per cent for people looking to borrow 75 per cent of their home's value.

Homeowners who want to end the deals ahead of their term will also face early redemption penalties of 5 per cent and 10 per cent on the five-year and 10-year mortgages respectively during the first year, although these charges will fall by 1 per cent for every year the loan is in force.

HSBC said it thought this policy was fairer to the majority of borrowers, as people are more likely to redeem a mortgage towards the end of its term rather than near the beginning.

People can still overpay the mortgage by up to 20 per cent of their monthly repayment each month without incurring any early redemption charges.

Martijn van der Heijden, head of mortgages at HSBC, said: "The clear feedback we have received from customers is that they now want to lock into today's historically low interest rates.

"Base rates don't have much further to fall, so demand for longer term fixed rate mortgages is increasing."

HSBC previously said it aimed to lend £15 billion this year, twice its level of total mortgage advances during 2007.