Homeowners can borrow for five years at less than 2%

The UK's first five-year fixed-rate mortgage under 2 per cent was unveiled on Saturday amid a flurry of rate cuts as mortgage brokers declared that borrowers have "never had it so good".

Available from Monday, the record low five-year deal by HSBC charges homeowners 1.99 per cent - down from 2.19 per cent - with an arrangement fee of £1,499 and is available to those with a deposit of at least 40 per cent. The bank is also launching a two-year fix at 1.24 per cent on the same terms.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "While incredibly low, a sub-2 per cent five-year fix has been on the cards for some time as lenders compete on rate and chase volume. However, it is still truly astonishing - an incredibly low rate for medium-term certainty."

Rates have been tumbling in recent months; the prospect of a rise in the Bank of England base rate has receded further into the future as inflation fell to zero in February.

Halifax has also cut rates on its high loan-to-value two and five-year fixed rate deals, trimming them by 0.3 percentage points. Rates on its two-year fixed rate loans for those with a deposit of 10-15 per cent start at 4.29 per cent with a £495 fee; or 4.99 per cent for a five-year fix.

On Friday, Lloyds also reduced rates on two- and five-year deals by 0.3 percentage points: for home movers with a 10 per cent deposit, rates start from 4.29 per cent with a £995 fee. Rates for first-time buyers start at 3.84 per cent.

Adrian Anderson, director of mortgage broker Anderson Harris, said: "Borrowers have never had it so good. Admittedly they need to get past the tighter restrictions introduced as a result of the mortgage market review, and require a sizeable deposit to access the best mortgage deals, but if they can do this, the rates on offer are spectacularly low."

Brokers said some of the moves were aimed at attracting the larger loans at the upper end of the market. Aaron Strutt of broker Trinity Financial said: "Even though prime property sales are slowing in the run-up to the election, the lenders are still trying hard to target wealthier borrowers and they have some particularly impressive rates."

Nationwide has lowered its two-year fixed rate deal - up to a maximum of £2m - from 2.14 per cent to 1.99 per cent, with no arrangement fee. Santander offers a 1.69 per cent two-year fix for mortgages up to £3m. Like Nationwide's loan, it is reserved for those with a deposit of at least 40 per cent.

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