HSBC is about to withdraw its market-leading mortgage deal for borrowers who have less than a 20% deposit.
The mortgage meltdown continues.........
HSBC is about to withdraw its market-leading two-year fixed rate mortgage deal, leaving any borrower without a 20% deposit facing thousands of pounds of extra costs from Monday.
The fee on the bank's 4.99% two-year fixed rate is more than £3,000 cheaper than the next best deal* that is on offer to borrowers with only a 10% equity stake in their home. It is also the lowest two-year fixed rate available at the moment, by more than 0.15%.
The deal, available to a maximum loan size of £500,000, will be withdrawn on Monday and replaced by a 5.39% five-year fixed rate with a high fee.
But borrowers can still access the 4.99% deal this weekend by calling the bank or visiting a branch.
What About Rate Matcher?
As part of its Rate Matcher initiative, from Monday, HSBC will start offering to match the existing fixed rates of its customers with 20% deposits, with rates from as low as 4.54%.
Priority will be given to existing customers until Monday 21st April, but after that anyone with an existing fixed-rate mortgage could potentially get their current rate matched - for a fee.
However, this leaves borrowers who need to borrow 90% of the value of their home high and dry. Borrowers who want to borrow more than £250,000 will also not be eligible for Rate Matcher deals.
And even borrowers with 20% deposits will not qualify if they are first-time buyers, as these borrowers do not have an existing fixed-rate mortgage.
If you fall into one of these camps, you may well find you are better off with the 4.99% deal that is about to be withdrawn, so my advice is: act quickly to get hold of that cheap rate before the deal disappears.
Bear in mind that, while the deal is only available by going direct to HSBC, it's still worth asking a whole-of-market broker to calculate whether it really is the best deal for you, just to be on the safe side.
More: HSBC Rides To Homeowners Rescue
> The fee-free, award-winning brokers at The Motley Fool Mortgage Service will always recommend the HSBC deal to you if it suits your circumstances best, even if they cannot get hold of this deal for you.
*The next lowest two-year fixed rate for borrowers who have only a 10% deposit is offered by Newcastle Building Society at 5.15% - but this deal has a staggering £4,500 fee. By comparison, the HSBC deal has a relatively small fee of just £1,499, making it at least £3,000 cheaper.
Additional reporting by Jane Baker.