Money experts have slammed HSBC's latest mortgage offering as a marketing move that shuts out most borrowers.
The bank has launched a mortgage with a rate fixed at a record low of just 0.99 per cent for two years.
The next lowest available is a two-year deal at 1.14 per cent from the Yorkshire Building Society.
Tracie Pearce, HSBC's UK head of mortgages described the mortagage as "a great value product" that would allow customers "the security of knowing that payments will not increase over the next two years."
However, some analysts were underwhelmed by HSBC's muscle-flexing.
Hugh Wade-Jones, managing director at Enness Private Clients, said:
HSBC’s 0.99 per cent fixed rate mortgage is an excellent product, but I don’t think a further lowering of cost is what the market is crying out for.
Rates are, and have been for years, at a historic low, but accessibility and common sense underwriting is what is lacking at most lenders.
For those lucky enough to have a 35 per cent deposit and a bog standard set of circumstances it is worth considering, but for the vast majority of people it’s not going to be suitable.
Andrew Hagger of Moneycomms urged customers not to fall for the "marketing hype". He said:
Some of the marketing departments of the banks and building societies adopt the same clever (some may say sneaky) advertising tricks as the big supermarkets when it comes to attracting consumers through their doors.
However it’s not until you read the small print that you realise there’s also a fee of £1,499 to pay for this mortgage – on a product that only lasts two years – so in effect that’s an extra £62.46 per month on top of your mortgage payment.
Whether this deal is as good as it looks will depend on the size of your mortgage – if you’re borrowing £220,000 or more then it makes financial sense but for smaller sums there are cheaper alternatives.
Tahsema Jackson, money expert at uSwitch, said the need for a 35 per cent deposit means HSBC is "shutting the door on most borrowers". She added:
People should look beyond headline rates and consider their own personal circumstances when looking for a mortgage deal. Many of the lowest rates carry very high fees and may not actually work out cheaper in the long run. For some borrowers a two year fixed mortgage will not provide enough stability and a five or ten year fixed deal might be the better option.