News Column

New mortgage defies impending base-rate rise

August 30, 2014

Miles Brignall

Interest rate rises may be just around the corner but First Direct has come out with a stonkingly good five-year fixed-rate mortgage at just 2.89%.

On Monday, the HSBC-owned bank is reducing all fixed-rate mortgages in its range, as well as launching the UK's cheapest 65% loan-to-value (LTV) five-year fixed-rate deal.

Given that two members of the Bank of England monetary policy committee voted earlier this month to raise interest rates, that looks like a very good deal, and beats the previous best-buys - the Woolwich's 2.99% offering, or the West Brom's five-year mortgage at 3.09%.

First Direct also has a two-year offset tracker at 1.69%. Both come with a pounds 1,450 fee. Before you apply though, be aware that the bank only accepts applicants with the very best credit scores.

First Direct has also come up with good deals in the 90% LTV market - the pick being the five-year fix at 4.29% with a pounds 950 fee.

Meanwhile, not to be outdone, its parent bank HSBC has come up with its own five-year fixes which are fee-free. Its 65% LTV deal can be had at 3.19% - a top deal for those with small mortgages. Its 80% LTV five-year fix is 3.89% (fee-free). There is also a 90% LTV two-year discount which is 2.89% with a pounds 999 fee.

Peter Dockar, head of mortgages at HSBC, says: "With a base-rate increase now a case of when, not if, our new range will help more homeowners reduce their monthly outgoings with the certainty of a fixed-rate with no cost and minimal effort."

Meanwhile, the Clydesdale and Yorkshire banks also have some new deals - the pick being the two-year fix for up to 85% LTV at 3.49%. It comes fee-free and you get pounds 500 cashback. Its five-year fix, for up to 85% LTV, is at 4.19% with a pounds 999 fee but also pounds 500 cashback.

Miles Brignall

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Source: Guardian (UK)

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