You can get a great mortgage with a low (ish) deposit

HSBC has cut the minimum deposit required on its best rates.

There's nothing like a bit of sunshine to give us a spring in our step and get us thinking positive. And combined with a range of good news stories last week you could be forgiven for thinking this is the beginning of the end of the crisis in the mortgage and housing markets.

Nationwide's announcement that house prices rose slightly last month made the headlines and the Bank of England had a trio of positive stories to tell. It reported that mortgages for house purchase rose by 20% in February, a record £8bn had been paid off total mortgage debt in the last quarter of 2008, and then predicted for the first time in over 18 months that lending would rise in the next three months.

By Friday the welcome news that HSBC has decreased the minimum deposit required on some of its best mortgages from 40% to 25% was enough to have some calling the bottom of the market.

Not so fast

Of course, the cynics amongst us dismissed Nationwide and the Bank of England's data as a monthly blip, skewed by low transaction numbers. The reduction in total mortgage debt is easily explained as a result of historically low interest rates allowing people to overpay their mortgages, and the prediction of increased lending probably isn't enough to reassure the doubters.

But there's no denying that HSBC's LTV announcement is evidence of the mortgage market loosening up a bit.

What exactly has HSBC done?

From today HSBC's best term tracker rate of 2.95% is now available to those with a 25% deposit. Before today you needed 40% upfront to access this deal, which comes with a £799 fee.

According to HSBC, an estimated 20% of mortgage holders in the UK have between 25% and 40% equity in their homes and will therefore now be able to access its cheapest tracker.

The lender has also launched a new 75% LTV (loan to value) fixed rate mortgage. The three-year fixed rate is priced at 3.99% and comes with a low fee of £599.

Why has it changed the LTV tier?

HSBC says that the move illustrates its commitment to continue lending to more borrowers at competitive rates. Only last month the lender said it had allocated £15 billion for mortgage lending in 2009, double what it lent in 2007.

They estimate that over two million more homeowners can now apply for their mortgages following the LTV change.

The best thing about this move is simply the fact that two of best rates from one of the market's most competitive lenders are not solely reserved for those with a 40% deposit. It shows a movement in the right direction towards offering competitive deals to all borrowers, something the Government is very keen to see lenders do.

Any bad news?

Only that one of HSBC's market-leading March deals has been pulled to make way for these April specials.

The deal was a best buy five-year fixed rate at 3.99% which has been replaced with the three-year fixed at the same rate. The five-year deal was only available to those borrowing up to 60% LTV so actually this new deal is far more accessible at 75% LTV.

In my view being able to lock into a 3.99% fix for five years was a better option, though for many a three-year fix is preferable, giving a good balance of security without a longer commitment.

Any better deals?

HSBC's new 75% deals are up there with the most competitive in the mortgage market at that LTV tier, but are they actually the best?

The new 75% LTV tracker deal at 2.95% is extremely low with only two lenders coming in lower -- First Direct (HSBC's sister lender) at 2.89% for its term tracker with a £799 fee at the same LTV tier.

Plus the Cooperative Bank has a five-year tracker at 2.89% with a £995 fee up to 60% LTV.

Across LTVs the next best trackers are:

The new three year fix at 3.99% is also pretty competitive, although it's matched by RBS at the same LTV tier.

Cheaper rates are available for those with a bigger deposit, such as Chelsea's 3.74% three year fixed deal at 65% LTV, or for borrowers who only want to fix for two years, including HSBC's own two year fix at 2.89%.

Below are some of the best buy two and three-year fixed rates currently on the market. I've included a range of 60% and 75% LTV tiers, and a range of fee options.

Three-year fixed rates

Two-year fixed rates    

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