Britain's biggest bank, HSBC, is offering mortgages to homeowners whose fixed rate deals with other lenders are coming to an end.
Britain's biggest bank, HSBC, is trying to lure tens of thousands of mortgage customers whose fixed rate deals are expiring with other lenders.
HSBC says it will match existing deals for up to two years and for a fee.
From Monday 14 April, HSBC will match peoples' expiring fixed-rate deals for a further two years.
Other lenders have been withdrawing their mortgage products, as the credit crisis makes it harder for banks to borrow money.
However the offer will be open for just five weeks, new customers will have to put down a minimum 20% deposit, and they will be charged a large fee.
More than a million households are expected to face higher mortgage bills this year as their special deals end.
An HSBC spokesman said "this is not too good to be true".
Last week, financial data firm Moneyfacts estimated 20% of mortgage products had been taken off the market.
HSBC, which relies less on the financial markets to raise the funds for its mortgages than other lenders, is keen to take advantage of the weakness of its competitors in the mortgage market.
This included HSBC-owned First Direct, which has temporarily withdrawn its entire range of mortgage products to new customers.
"Many homeowners are worried about their monthly repayments going up and we can help take away that anxiety," said the bank's head of mortgages, Martijn Van Der Heijden.
Homeowners should hold this latest offer up against what's available from other lenders. David Hollingworth, London and Country mortgage brokers
Choosy
It is understood that HSBC, which relies less on the financial markets to raise the funds for its mortgages, is keen to take advantage of the weakness of its competitors in the mortgage market.
The bank is expecting huge demand for its latest offer and will use three times the usual number of staff to handle applications.
The bank is expecting huge demand for its latest offer and will use three times the usual number of staff to handle applications.
Customers will need to have at least 20% of the equity in their home and the fee paid will depend on how much they want to borrow and over what period of time.
How good a deal it is depends on the size of the fee Ray Boulger, John Charcol mortgage brokers
David Hollingworth, from mortgage brokers London and Country, told the BBC those coming off fixed rate deals should study HSBC's offer carefully before signing up.
A bank spokesman stressed that it would be fussy about whose business it took on, and that it was not seeking to hoover up hundreds of thousands of mortgage holders who may have taken a mortgage recently with only with a small deposit.
"HSBC has in the past not always been the most competitive in the market," he said.
Its minimum mortgage rate under its deal will be 4.54%.
"Homeowners should hold this latest offer up against what's available from other lenders."
But the bank admitted it was exposing itself in some instances to offering new mortgages at what would now be exceptionally low interest rates, in some cases even below the Bank of England's current base rate of 5.25%.
The bank estimates that 72% of its eventual customers will pay a fee of less than £1,000 and that 57% will pay less than £600.
Its deal will be open to people whose fixed rate deals are due to expire by 30 June this year and the maximum loan will be £250,000.
"It's a great deal for customers coming to the end of their deals who meet HSBC's criteria," said Aaron Strutt, from mortgage brokers Chase De Vere.
Mortgage deals have been vanishing
"Many other two-year fixed-rate deals are priced at up to 6%," he added.
Ray Boulger of mortgage brokers John Charcol said potential customers should compare a quote from HSBC with other deals on offer.
"How good a deal it is depends on the size of the fee," he said.
"The biggest fees, of several thousand pounds, will apply to people with low rates and big loans."
Mortgage shock
More than a million households are expected to face higher mortgage bills this year as their special deals end.
Many other lenders, including HSBC's own internet bank First Direct, have been withdrawing their mortgage products in the past few weeks, as the credit crisis makes it harder for banks to borrow money.
Nearly 40% of ordinary residential mortgage deals have been withdrawn by lenders in the past year.
"If you can get a sub 5% deal with a £999 fee then it's definitely worth pursuing," said Andrew Hagger of Moneyfacts.
"However it will be interesting to see if HSBC can cope with potentially high levels of demand that have hit other mortgage lenders in the last few weeks."
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