Spotlight: HSBC's 1.99% discount mortgage

The deal

HSBC is offering a market-beating discount mortgage from Monday next week with a rate of 1.99 per cent.

The good points

The loan is a discount of 1.95 per cent from the bank's standard variable rate of 3.94 per cent for two years. HSBC's SVR is already lower than many other lenders.

The bad points

The SVR is a moveable feast and there's nothing to stop the bank raising it at any point. The new deal is only available if you have a 40 per cent mortgage which, while pretty standard at the moment, leaves many borrowers with no chance of getting it. The arrangement fee is £999.

Conclusion

Even taking into account the possibility of HSBC raising its SVR, this looks like a good bet if you qualify. While £999 seems a steep arrangement fee, many other lenders charge more. However interest rates may rise, meaning that over the term of the deal there may come a time when you may have been better off with a low-rate fix.