Don't miss this ultra low 2.19% mortgage rate!

HSBC has launched a fantastic new mortgage deal but it's only available until 15 August, so act now or miss out!

This week, HSBC has launched a cracking new range of mortgage deals. Borrowers, who are looking for a super low tracker, won’t be disappointed with the best-buy rate the lender has to offer.

The HSBC lifetime tracker deal is the new market-leader with a current rate of just 2.19% (BBR + 1.69%), but you’ll need to hurry because it’s only available until 15 August when it’ll be whipped off the shelves, just as quickly as it arrived.

So what’s the catch?

You’ll need to have an equity stake in your home or a deposit of at least 40% - or 60% loan to value - to be eligible for this top tracker.

That’s not really surprising given that many of today’s best mortgage deals are reserved for borrowers with big deposits or lots of equity. But, on the plus side, HSBC claims 80% of its mortgage applicants are accepted, so this isn't a case of cherry picking the best borrowers as you might suspect.

How does HSBC’s new tracker deal compare?

There are a handful of lifetime trackers on the market with really attractive rates. Here are the top three:

Top 3 lifetime trackers

Source: Moneyfacts. BBR = bank base rate.

As you can see, HSBC’s new lifetime tracker deal has gone right to the top of the best-buy table with that market-leading rate of 2.19%. The deal also comes with some other major benefits such as a super competitive product fee of just £99. On top of that, HSBC doesn’t demand an early repayment charge.

So, if you change your mind and decide you want to remortgage elsewhere, you won’t trigger a penalty at any time.

But the lender doesn’t offer the lowest tracker rate of all. Lloyds TSB/Cheltenham & Gloucester takes this accolade with a two-year tracker deal at BBR + 1.49%, with a current pay rate of just 1.99%. Like HSBC’s deal, this rate is available to borrowers at 60% LTV. But Lloyds’ downfall here is the truly staggering product fee of 2.5% of the mortgage loan. Someone borrowing say, £150,000 would have to pay a whopping £3,750, making HSBC’s deal far cheaper by comparison.

There’s also a fee-free version with a pay rate of 2.79% (BBR + 2.19%) which is available to borrowers with 70% loan-to-value (that is, a deposit or equity stake of at least 30%). But, unless you need the higher LTV limit, I would definitely opt to pay the small fee, which is far more cost effective than paying an extra 0.50% on the entire mortgage loan.

How does HSBC’s new fixed-rate deal compare?

But what if you don’t like trackers?

Fear not, HSBC has also introduced a fantastic five-year fixed rate product at just 3.95%. This time the product fee is £599, but that's still pretty competitive relative to other longer term fixes. Let’s take a look at how the deal compares:

Top 3 five-year fixed rates

Source: Moneyfacts.

Once again, HSBC has stormed to the top of the table. Right now, I think fixing your mortgage rate at under 4% for the next five years is a smart move for borrowers who can meet the loan-to-value requirements. Over the five-year term, I expect the fixed rate option would be cheaper overall than the lifetime tracker over the same period despite that ultra low initial rate.

After all, the rate on the HSBC tracker deal - and indeed all base rate tracker mortgages - will only move upward from here. As soon as the economy begins to strengthen, the base rate should start to climb which will drive up tracker rates pretty quickly.

Having said that, there’s no way of predicting how the base rate will behave in the coming years, so I could be wrong. But even if the fixed-rate deal doesn’t prove to be better value, it will still give borrowers the security of a low fixed rate with no need to remortgage for the next five years.

Whichever way you look at it, a mortgage rate fixed below 4% over the longer term is definitely worth considering.

Just bear in mind, if you decide to remortgage before five years is up, an early repayment charge will apply during the fixed-rate period. This is 5% of your mortgage advance in year one, falling to 1% in year five.

Recent question on this topic

• sikkinixx asks:

  1st time buyer, with over 25% desposit, joint application but was self employed for a year

  • 
    champ69 answered "now employed for a number of mths, on a full time permanent contract and not in a probationary..."
  • 
    sikkinixx answered "Thank you. This is currently where we would fall short asI am still in my..."
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Other new HSBC deals

HSBC hasn’t stopped there. The lender has also launched a two-year discount mortgage with a super low rate of 2.19%. This deal offers a 1.75% discount off HSBC’s Existing Borrowers Rate of 3.94% (variable).  

The fee is higher than the tracker deal at £599, and early repayment charges are in place for the duration of the discounted period.

Finally, HSBC has also introduced further fixed-rate products over two and seven years. The two-year deal is available up to 90% LTV and offers a rate of 5.49%. This isn’t a market-leading rate, but the deal makes it into the top six best-buys.

Meanwhile, the seven-year fix is open to borrowers with a 30% deposit or equity stake - so, 70% LTV - and comes with a rate of 4.89%. There are only a handful of deals which offer fixed rates over this period, but again it’s one of the best.

Product fees of £599 apply to all the new fixed-rate deals.

More: The best mortgages for different borrowers | Five borrowers who must take mortgage advice

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 4045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term will revert to the lender's standard variable rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.