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HSBC has taken the next step in the mortgage price war, offering a new "lowest ever" deal at 1.49%.
The new two-year fixed rate loan is available for those with a 40% deposit, and comes with a fee of £1,999.
The news comes on the anniversary of the Funding for Lending Scheme, which has encouraged lenders to lower mortgage rates for low-risk lenders with sizeable deposits or existing equity.
The low record-low 1.49% mortgage sets HSBC further apart from Chelsea Building Society’s two-year fix at 1.64%, and Yorkshire Bank’s deal at 1.66% (both 65% LTV), though both of these products carry smaller arrangement fees (£1,545 and £1,345 respectively).
For those who prefer to balance a higher initial rate with a lower fee, which is frequently of benefit to those borrowing a smaller amount, HSBC's parallel 60% LTV two-year fixed product has a higher initial rate of 2.39% with a negligible fee of £99.
Another splendid competitor in this field is the Norwich and Peterborough's two-year fixed rate mortgage at 1.99% (65% LTV) with a fee of just £295.
But in another move to tempt customers, HSBC will offer remortgaging customers an added bonus of £500 cashback on its standard and no-fee mortgage range.
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"A good time for borrowers to review their existing rates" - Peter Dockar.
Peter Dockar, head of mortgages at HSBC, has encouraged borrowers to consider whether they could benefit from a better deal.
"We have seen increasing confidence in the market and with mortgage rates at an all-time low; now is a good time for borrowers to review their existing rates," he said.
David Hollingworth of the London & Country mortgage brokers warned customers not to be seduced by the initial rate alone.
"Mortgage borrowers are much more aware these days that there is more to a mortgage deal than rate alone," he said.
"That fee will have a major bearing on the overall cost of the deal and will certainly skew it in favour of larger loans."
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Keith McDonald
Which4U Editor
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