HSBC offers record low mortgage at 0.99% and other banks may follow

The two-year fixed rate from HSBC is the first fixed deal to dip below 1 per cent but analysts say other lenders may follow, leading rates even lower.

Mortgage rates could fall even further if the Bank of England drops it's rate again as some have predicted (Getty)

HSBC is offering a record low mortgage interest rate of 0.99 per cent, as intense competition makes borrowing cheaper than ever.

The two-year fixed rate from HSBC is the first fixed deal to dip below 1 per cent but analysts say other lenders may follow, leading rates even lower.

The Bank of England reduced its interest rate to an all-time low of 0.25 per cent last month. The move was part of a package of measures designed to boost lending and stimulate the UK economy after the shock of the Brexit vote sent markets into turmoil and led to a number of gloomy economic forecasts.

Many economists predict Threadneedle Street will drop its rate agaign, to 0.1 per cent, when it’s Monetary Policy Committeee meets again in November, meaning even cheaper home loans could be available.

HSBC’s 0.99 per cent rate is only available to those with a 35 per cent deposit and only on loans of up to £500,000. Those with less deposit will pay much higher rates. The offer also comes with a £1,499 set-up fee and allows annual overpayments of up to 10 per cent a year

The bank already offers 0.99 per cent to some variable rate borrowers but no other bank has yet broken the threshold.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “As with any deal, applicants should always work out the true cost of the mortgage to decide whether it’s right for them.”

The fall in rates will, at least temporarily help buyer who are facing record high property prices. Property website, Rightmove, published figures showing that prices were up 4 per cent from a year ago, despite fears that they would take a hit from the uncertainty in the run-up to and aftermath of the Brexit vote.

Nationwide said earlier this month that a chronic shortage of supply is continuing to keep prices high.