Buyers, not remortgagers, will benefit from HSBC's increased lending quota

HSBC has responded to growing demand from first-time buyers, announcing an increase in the amount of money it is earmarking for purchase loans at the 90% loan to value limit.

The bank's £500 million increase in allocated lending should enable around 3,650 additional house purchases between now and the New Year (based on an average first-time purchase price of £150,289).

HSBC Head of Mortgages, Martijn van der Heijden, comments that many buyers who put off purchasing last year are now heading back to the housing market as they have seen reports of prices bottoming out.

If you want a fixed-rate 90 per cent mortgage, HSBC's rates work out as follows:

• 5.99 per cent fixed for 2 years
• 6.49 per cent fixed for 5 years
• Both these deals cost £599 in fees.

Competing deals are available from NatWest (5 years at 5.99 per cent, with no fees) and Yorkshire Bank (2 years at 5.99 per cent, with a £999 fee).

HSBC is also offering 90 per cent LTV mortgages with tracker interest rates. You can opt for a 2-year discounted tracker (3.89%, booking fee £1199) or a lifetime tracker (4.09 per cent, booking fee £999).

The surprise is that competition for lending at this level is still so low.  However, with the cost of inter-bank lending having dropped from its credit-crunch high to a historically low rate, we might see more lenders boarding the 90% LTV bandwagon.

Discounted variable rate deals get extra competition

Clydesdale Bank and Yorkshire Bank (separate trade names, but same operation) are releasing discounted variable rate mortgages that start as low as 2.99%, provided you have a 40% deposit or equity share.

The 2.99 % figure is a discount of 1.60% from the banks' Standard Variable Rates. If your deposit isn't that juicy (and most of ours aren't), you'd have to settle for starting on 3.49% (up to 75% LTV) or try out the 80% LTV offset mortgage starting on 4.49%.

These aren't bad deals.  They won't snatch the sub-2% headlines from HSBC and Woolwich, but unlike those deals, you might be able to actually get this one for a reasonable fee (£995).  The fees and interest rates sit in good company with competitors, although HSBC and First Direct might have slightly lower rates for similar offers.