Competition to offer mortgages with rates below 1% heats up

HSBC UK will offer a rate of 0.99% to borrowers with a 40% deposit.

Model houses on piles of coins and banknotes (PA Archive)

Competition to offer sub-1% mortgage rates has intensified, as major lenders shake up their ranges.

HSBC UK has unveiled a mortgage rate below 1% for the first time in nearly five years for the bank.

It has also cut the rates on various deals across its range, including those offered for people with 5% deposits under the Government-backed mortgage guarantee scheme.

Among the new deals are a two-year fixed-rate deal at 0.99%. Borrowers will need a 40% deposit and the mortgage has a £999 fee.

For the first time in almost five years we have a sub-1% mortgage

Michelle Andrews, HSBC UK

Michelle Andrews, HSBC UK’s head of buying a home, said: “For the first time in almost five years we have a sub-1% mortgage, and we are also reintroducing our three-year fixed-rate option, with many rates lower than when we last offered them in July 2020.”

Nationwide Building Society also announced that it is cutting rates in its range from Friday June 18.

Nationwide is offering a 0.99% mortgage fixed for two years for borrowers with a 40% deposit and with a £1,499 fee.

Nationwide’s first-time buyer mortgages also come with £500 cashback, while those looking to re-mortgage to the Society can choose between £500 cashback or free standard legal fees.

Henry Jordan, Nationwide’s director of mortgages, said: “Whether someone is buying a new home or re-mortgaging their existing property, we have a range of competitive mortgages on offer, including sub-1% rates.”