There have been countless discussions on the global downturn and how the UK’s turbulent economy has been affecting the housing market recently. Furthermore, the situation affecting home improvement has been heavily commented on, as UK homeowners and property developers have been keen to splash out on such improvements while those in the US have proved far more reluctant. In light of economies around the world slowly emerging from recessions, housing markets are also showing signs of improvement. Moreover, in the UK, HSBC has thrown down the gauntlet to other mortgage lenders with the introduction of a 1.99% home loan.

The 1.99% mortgage rate will apply to people who are able to place a minimum 40% deposit on a property and there is also an arrangement fee of £1,199. Nevertheless, the new loan by HSBC signals a wider opportunity that is emerging in the UK housing market. Indeed, these mortgages will be attractive to property developers who are able to put up large initial deposits and enjoy low mortgage rates thereafter as they enter the lucrative rental market. However, the 1.99% HSBC mortgage is not entirely in line with current swap rates, which refer to the borrowing between financial institutions. In fact, the swap rates remain lower than the new mortgage rate offered by HSBC, so the lower rates have not yet been fully passed on to customers.

The consequence of HSBC reducing its lowest mortgage rate and the swap rates remaining at a lower value is likely to be the mortgage industry becomes far more competitive over the next year or so. As more lenders adopt lower rates, home buyers and property developers will be able to enjoy greater savings.

Related posts:

1. Further Glimmers of Hope for Housing Market The Council of Mortgage Lenders announced on Thursday mortgage lending...
2. UK Housing Market Recovery: a False Dawn? Homeowners and property developers were given encouraging signs recently that...
3. The Housing Market Slump: a Renter's Paradise? Although the UK economy is showing signs of recovery, the...
4. Further Evidence of a Housing Market in Recovery? On Tuesday, one of the UK’s leading mortgage lenders announced...
5. Fall in House Sales as Mortgage Approvals Rise According to figures released on Thursday, the UK housing market...