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Saturday 01st of August 2009
September 9, 2008

HSBC cuts fixed rates by 0.56%


by Gill Montia
HSBC cuts fixed rates by 0.56%

HSBC has cut rates on its entire range of fixed home loans by a minimum of 0.46% and a maximum of 0.56%

The UK’s biggest bank says it is passing on the benefits of lower funding costs to customers.

Borrowers signing up for the lender’s fee-free two, three and five-year fixed-rate mortgages will gain from a 0.56% reduction and interest on fixed-rate deals carrying a £799 fee is down by 0.46%, to 5.97%.

The bank is also introducing a three-year fixed-rate deal for new and existing customers, at 5.69% (a £999 booking fee applies).

Head of mortgages, Martijn van der Heijden, says the rate cuts will bring a saving of a least £500 a year to an average HSBC mortgage holder.

The news from HSBC followed the rescue by the US Treasury of mortgage guarantee companies, Fannie Mae and Freddie Mac.

The move has raised hopes that the credit crisis has reached a turning point; stock markets worldwide rallied on the news and shares in UK banks rose because some hold bonds in the rescued companies.

With both Fannie and Freddy teetering on the brink of collapse the value of the bonds had plummeted leaving banks exposed to further large writedowns.

The £110 billion rescue by the US Government has provided much needed reassurance to the financial markets, which in turn could ease mortgage lending in the UK.

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