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"Cheapest ever" UK mortgage

Date: Wed, 07 Sep 2005

The "cheapest ever" mortgage, with a rate of just 2.99 per cent, has hit the UK home lending market.

First direct, HSBC's telephone and internet banking arm, has introduced a discounted mortgage rate that it describes as "the lowest rate since Elvis was in short trousers".

The 2.99 per cent rate will be available until May 2006, before returning to first direct's standard variable rate of 5.5 per cent. The mortgage also allows for unlimited overpayments during the introductory period as well as the possibility of offsetting any savings or income against the outstanding balance.

However, some homebuyers could better off considering a deal that has a longer introductory period, even at a slightly higher rate, especially as interest rates are expected to fall again.

However, buyers who are keen to overpay in the first few months of their mortgage will find first direct's low offer particularly attractive.


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