HSBC announces £1bn mortgage boost

Around £1 billion has been made available by HSBC for mortgage lending to buyers who can only stump up 10% of the value of their intended home.

The deal is on offer to HSBC customers with a Plus account or those who qualify to be a Premier customer, and is part of a £15 billion pot set aside by the banking giant for new mortgage lending in 2009.

Frustrated first-time buyers will welcome the move after seeing their options shrink over the last year as lenders demanded increasingly high deposits following the credit crisis.

January saw a record low in the number mortgages taken out. The 8,900 forwarded were the worst since the Council of Mortgage Lenders' began keeping records in 2002 and considerably lower than the peak of 54,100 in June 2002.

The funding boost comes in part as a reaction to renewed interest in the property market, with estate agents reporting rising inquiries since the beginning of this year.

Homebuyers looking to borrow up to 90% of their property's value are being offered a two-year fixed rate mortgage of 4.99% with a £1,499 arrangement fee by HSBC. This is 1% lower than the current best buy rate of 5.99% offered by Clydesdale Bank, although the HSBC deal has a higher arrangement fee.

HSBC is also offering a higher rate of 5.49% on a two-year fixed rate deal for people who only want to pay a £199 arrangement fee, as well as a lifetime tracker with a current rate of 4.59% - or 4.09% above base rate - which comes with a £999 arrangement fee.

In order to qualify for the deals people must open an HSBC Plus account, a packaged current account that costs £12.95 a month and offers services such as free travel insurance and breakdown cover.

Alternatively, they must qualify to be an HSBC Premier customer by holding at least £50,000 worth of savings or investments with the group.