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HSBC relaunch the 90% mortgage

Thursday, 9 April 2009 1:59 PM

HSBC have today relaunched a range of mortgages with loan-to-value of up to 90 per cent.

From Tuesday HSBC will make the new mortgages available, backed by £1 billion of funding.

However, while the new mortgages are good news for the first-time buyer, they come at a significant cost; as the Bank of England base interest rates today remained unchanged at 0.5 per cent, the lowest HSBC two-year fixed rate stands at 4.99 per cent.

The new mortgages will also only be available to HSBC Plus account and Premier customers, despite HSBC saying they hope the mortgage will be able to help those with low equity, such as first-time buyers.

Joe Garner, group general manager of HSBC's personal financial services said: "Although house prices have fallen, and continue to fall, they won't fall forever. At HSBC we are standing by our customers through thick and thin and these changes mean we can continue to give customers the best possible deal on their mortgage.

"This is a one billion pound commitment and it says we appreciate our customers' loyalty."

Louise Cuming, head of mortgages at moneysupermarket.com, added: "HSBC continues as one of the few lenders actively seeking to steer the mortgage market at the moment. Its decision to cut the rates on its loans available up to 90 per cent is great news for first-time buyers trying to get onto the housing ladder and existing borrowers who don't have much equity in their home.

"However, as ever there, is no such thing as a free lunch, or in this case a cheap mortgage without caveats. HSBC current account customers and those not currently with HSBC will have to open a HSBC Plus current account at a cost of £12.95 a month for a minimum of 12 months to get access to these deals.

"It's also worth noting that the 90 per cent two-year fix at 4.99 cent won't be the cheapest option for many borrowers."

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