A mortgage with a record low rate of less than 3% has been launched by banking giant HSBC.

Under the Premier two-year discount deal, which is priced at 0.95% below the group's standard variable rate, borrowers will pay 2.99% from February 6 when the latest interest rate cut comes into effect.

As well as being the first rate offered to new borrowers to dip below 3% since interest rates began to fall, it is also the lowest mortgage rate HSBC has ever offered.

It does not include an initial discount period and is believed to be the first such mainstream mortgage to have a starting rate of below 3%.

However, only people who have a 40% deposit and qualify to be an HSBC Premier customer are eligible to take advantage of the deal.

In order to qualify for a Premier account, people need to either have at least £50,000 in savings and investments held with HSBC, or they have to have a £250,000 mortgage with the group and a salary of £75,000.

However, people do not have to have their salary paid into their Premier account, and the group may waive the requirement for new customers to open one of the accounts as long as they meet the criteria.

HSBC's head of mortgages, Martijn van der Heijden, said: "As the Bank of England base rate comes down, we have the ability to increase even further the affordability of our mortgages, many of which were already the cheapest to be found on the high street."

But David Hollingworth, of mortgage broker London and Country, cautioned: "While it is an eye-catching rate, for many people it won't be available even if they have the equity."

He said the additional requirements introduced a new way of selecting customers, as people would need to have a minimum salary or savings level, as well as a large equity stake in order to qualify for the deal.

He added that the mortgage moves up and down in line with HSBC's SVR and not the base rate, meaning that there was no guarantee that future interest rate cuts would be passed on, and potential borrowers should be aware of this.

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