Britain’s biggest lenders are ramping up the mortgage price war for Brits getting onto the property ladder.
HSBC is dangling a £1,500 cashback sweetener for first-time buyers alongside a cut to its fixed-rate deals. The banking giant has reduced selected residential mortgage rates by up to 0.29 percentage points, with its five-year fixed-rate deal for buyers with a 5% deposit now priced at 5.37%. The package is particularly eye-catching because it comes with £1,500 cashback, a free valuation and no product fee.
These perks could help cash-strapped buyers facing the high upfront costs of purchasing their first home. The deal was highlighted by Moneyfacts as one of its financial ‘Picks of the Week’, earning an ‘Outstanding’ product rating.
Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, said: “The deal also offers a lucrative incentive package which includes a free valuation, £1,500 cashback and no payable fees, which may make this an ideal option for first-time buyers looking to keep costs to a minimum.”
The move comes as lenders continue to jostle for market share amid expectations that borrowing costs could ease further over the coming months.
However, mortgage borrowers are still facing rates significantly higher than those available before the inflation and interest-rate shock that followed the pandemic.
Landlords also offered lower rates
HSBC has also trimmed rates on selected buy-to-let mortgages by up to 0.09 percentage points. Its five-year fixed-rate mortgage at 65% loan-to-value is now available at 4.57% for second-time landlord borrowers.
The deal carries a hefty £3,999 product fee but includes a free valuation and permits overpayments of up to 20%. Moneyfacts said the rate reduction helped cement its position as a Best Buy product.
Savers can earn more than £900 tax-free
The latest competition is not confined to mortgages. Savers looking to shelter cash from the taxman can now secure a market-leading 4.67% on a one-year fixed-rate cash ISA from Secure Trust Bank.
Someone depositing the full £20,000 annual ISA allowance could earn more than £900 in tax-free interest over the term, according to Moneyfacts. The account can be opened with a minimum of £1,000 and allows additional deposits for 30 days after opening.
However, customers who need access to their money early face a penalty equivalent to 90 days’ interest and must close the account. Ms Eastell said: “The boost to the one-year option sees the account pay a market-leading 4.67%.”
Personal loan rates remain competitive
Borrowers have also been given a fresh option despite higher rates in parts of the loan market. M&S Bank has increased the rate on its personal loan range for borrowing between £7,500 and £25,000, taking the representative APR from 5.7% to 5.9%.
Despite the increase, Moneyfacts said the loan remains among the most competitive deals currently available. One attraction is that borrowers can make overpayments without being hit by an early repayment charge, potentially reducing the overall interest bill.
Experts continue to urge consumers to shop around before taking out any financial product, as rates and incentives can vary widely between providers.
The latest round of deals underlines how banks are increasingly using cashback offers, fee-free packages and headline rates to attract customers in an increasingly competitive market.
