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Lenders launch New Year sales on rates

Banks and building societies are offering their own “January sale” discounts on mortgage rates, in an attempt to entice new customers in the new year – but experts are warning that not all these sale deals are competitive.

“It’s not just the high street shops that are holding January sales – lenders are also getting in on the act,” said Melanie Bien of Savills Private Finance

HSBC, for example, has launched a two-year discount mortgage with a rate of 2.29 per cent, available for loans of up to 60 per cent loan-to-value (LTV).

The rate is a 1.65 per cent discount on the lender’s standard variable rate (SVR) of 3.94 per cent and has a booking fee of £1,499.

Bien said that while the HSBC discount mortgage was an “excellent rate”, borrowers should be aware that lenders are able to increase their SVRs at their discretion. Marsden Building Society became the latest lender to raise its SVR from 5.49 per cent to 5.95 per cent this week – although the Bank of England held the base rate at 0.5 per cent – and experts said more lenders could follow suit.

However, not all January deals from lenders are as attractive as HSBC’s.

Leeds Building Society is offering borrowers the opportunity to save up to £1,135 if they opt for one of its three-year fixed-rate mortgages. The lender will waive the £800 completion fee and provide a free standard valuation worth £335.

But with rates starting from 4.99 per cent, brokers say borrowers will be able to find more competitive rates elsewhere.

Nigel Bedford, mortgage manager at Largemortgageloans.com, pointed out that the savings on fees are outweighed by the higher monthly payments over three years.

Borrowers could instead opt for a 4.49 per cent three-year fixed-rate from Abbey, which has a £995 fee and a £250 cashback.