HSBC to reintroduce low-deposit mortgages
First time buyers in the UK will be boosted by the reintroduction of HSBC’s 10% deposit mortgages this week.
The bank pulled out of the market due to overwhelming demand for such deals in September.
Tomorrow, HSBC will start offering two and five-year fixed-rates for purchases and remortgages with up to 35-year terms. The rates will be unveiled on the day.
The bank was one of the few lenders to keep offering low-deposit mortgages during the COVID-19 pandemic when most banks and building societies became fearful of approving riskier loans.
However, in September HSBC pulled out after being inundated with demand from borrowers seeking loans of 90% of a property’s value.
Barclays cut the rates and eased restrictions on its 90% mortgages on Thursday last week, having resumed offering five-year fixed rates for people with low deposits at the end of last year. The bank now also has a two-year fixed-rate deal at 3.55 % with a £999 fee for borrowers with a 10% deposit or 3.75% with no fee.
Lenders tend to prefer longer fixes on the premise that they protect borrowers against falls in property prices when they come to remortgage. Barclays has also opened up its 90%mortgages to home movers as well as first-time buyers, The Times reports.
Aaron Strutt from mortgage broker Trinity Financial, said: “Many first-time buyers have been desperate for low-deposit deals to return. There’s a large premium to pay to access these 10 per cent deposit rates, but as more lenders come back into the market pricing will improve.”
According to Moneyfacts, the average two-year fixed rate on a 90% mortgage increased from 3.11% to 3.79% during 2020.