With general interest rates on mortgage payments down to an incredible low, it has been called one of the best times to invest in a property in a long time.
And now the large banks are looking to spread this message of property prosperity. HSBC has announced that it will be offering 5 year fixed rate mortgages.
As it stands the average 5 year fixed deal is being sold at around 3.55% at the other large lenders, so HSBC has set the bar high for customer friendly interest rates on mortgages.
This new deal does come with a catch however. Buyers must be able to put up a 40% deposit before gaining access to this low rate mortgage. The booking fee is also 6 times higher than average, at £1,499.
Whilst this is a low risk strategy from HSBC, as the high deposit amount lowers the amount owed to them by the customer, many experts are predicting that banks will start to become more comfortable giving more high risk loans than in previous years. With a stable economy, rising minimum wages and a strong currency, UK workers are in a very good place financially.
This gives the banks confidence that over time, these investments will be profitable, even with customers that previously would have considered it too high risk.
HSBC is not the lowest lender however. Some smaller lenders such as Yorkshire Building Society are offering 1.18% 2 year fixed rates on the condition of a 35% deposit. Norwich and Peterborough Building Society are offering a 1.64% 2 year deal on condition of 35% deposit.
This competition for the lowest, most customer friendly rate is great for borrowers as it will lead to ever increasing cuts to interest rates, and deposit percentages needed. This will likely lead to a sizeable boost in the amount of mortgages being taken out, and should provide an excellent stimulus to the UK property market, and the economy as a whole.