HSBC has announced that it is withdrawing its five-year fixed rate mortgage that allowed borrowers with 40 per cent equity to qualify for a mortgage interest rate of just 2.99 per cent.
The product was available for just one month and came with a fee of £1,999. The product launch led to a raft of similar deals being offered by other providers.
HSBC was the first but was followed by similar deals from NatWest and Santander. At the time HSBC’s product was the cheapest ever five-year fixed rate deal.
Santander launched a deal at the same rate, charging a £1,495 arrangement fee, then NatWest usurped it with a 2.95 per cent five-year fixed rate deal that came with a fee of £2,495. Nationwide launched a four-year fix at 2.89 per cent.
It comes after the Bank of England has maintained base rate at 0.5 per cent since March 2009. Most analysts do not expect base rate to go up until at least 2014.
A spokeswoman for HSBC said the deal was being withdrawn as it had met the funding limit: “We have simply reached the end of funding after one month. The money allocated for the product has been used.
"It was designed to bring in business – we knew it would be popular," she added.
However, its five-year fixed rate deal at 3.29 per cent for those with a 40 per cent loan-to-value (LTV) ratio is still available at a reduced fee of £499, down from £999.
Both Santander and NatWest have confirmed that there deals are still available but gave no indication as to how long that would remain the case.
Michael Ossei, personal finance expert at uSwitch.com, said: "Unfortunately good rates like this don't tend to stay on the market for very long so when you do see a good deal it's best to act quickly or risk missing out.
"Although HSBC has now pulled its market leading 2.99% deal, it will be cutting the fee on its 3.29% five year fixed rate deal from £999 to £499, making it much more competitive and attractive to would-be homeowners and those looking to remortgage.
"Those on the hunt for a similar deal may want to consider NatWest’s five year fix at 2.95%, but be warned - it carries a hefty £2,495 fee and is only available to new customers buying a home - you can only remortgage if you're already an existing NatWest customer.
"Although we hope other lenders will launch new deals to fill the gap you can never be certain and the worry is that more market leading rates will be pulled in the near future and replaced with less competitively priced deals."