HSBC has launched the lowest five-year fixed rate mortgage on the market, underscoring the intense competition in home lending since the Bank of England cut its base rate to record lows.
The product offers a 1.69 per cent interest rate for five years, and comes with a £999 fee. It is available for buyers who are able to commit to a loan-to-value ratio of 60 per cent.
Tracie Pearce, HSBC UK's head of mortgages, said the bank was cutting its rates ahead of the home-buying season that follows the Easter break.
The move from HSBC comes after Yorkshire Building Society brought mortgage rates to a record low, offering a two-year standard variable rate of just 0.89 per cent.
David Hollingworth, mortgage expert at L&C Mortgages, said: "This is yet another signal that the mortgage market is more competitive than ever and lenders are scrapping it out to attract business, whether it's from those buying their first home, moving house, or looking to switch to a better deal."
The record-low mortgage rates have been boosting the re-mortgage market. In February, re-mortgage lending climbed eight per cent year-on-year, according to figures from the Council of Mortgage Lenders.
However, Hollingworth said many borrowers will be put off by the high fees that come with the most competitive rates, and may stick to higher interest payments to avoid the hefty one-off payment associated with switching mortgage plans.