The property and mortgage market has been going through a huge amount of turbulence over the past couple of years, sending not only consumers but even the banking industry into confusion.

One thing that has lightened the load for many consumers is the fact that the base interest rate has plummeted, going from 5 percent last October to a record low of just 0.5 percent by April of this year. However, whilst the base rate is at its lowest ever borrowers that want to get the best rate of interest on their mortgage loans are still struggling.

A range of mortgage offering temptingly low headline interest rates have been launched by a variety of lenders over the past couple of months, such as the popular Rate Matcher mortgage from HSBC. With this Rate Matcher mortgage the bank promises to match or beat the current rate of interest that consumers are paying and will allow them to fix the lower rate for two, three, or five years. However, this and other deals have been criticised by some industry officials.

With the Rate Matcher mortgage customers have to have a deposit of at least 25 percent, and in order to get the most competitive rates will need at least 40 percent deposit. In addition to this the fees that are being charged to some customers for these mortgages have been slated, with claims that the bank has been charging close to £5000 in some cases just by way of a fee.

One mortgage broker stated: “Whilst the flexibility to select a rate will hold plenty of appeal, the trade off is that the lower the rate selected the bigger the fee. Borrowers should therefore be sure to hold up any Rate Matcher offer against deals in the open market.”

Another industry official added: “For some borrowers this deal will represent a significantly lower rate than the SVR their current lender is offering. However, the maximum loan-to-value ratio of 75 per cent severely limits the deal’s audience and for those with the equity, a hefty up front fee is likely to prove quite a deterrent. Another potential issue to note is that this is a fairly complicated product and one which borrowers might need expert advice to fully understand. However the traditional sources of such advice, the intermediary market, do not have access to this deal, as HSBC’s mortgage products are only available directly from the lender.”

There is evidence to show that with the base rate at an all time low of 0.5 percent more and more people are looking at locking in at a low rate whilst the going is good, but they are warned to be mindful of the fees that lenders are charging as well as the high amount of deposit that they are likley to need to get the best rates.

One official said that consumers needed to make up their minds quickly with regards to whether locking in at a low rate now was a good idea before interest rates start to rise again. He said: “With the base rate at its historic low, it’s definitely a case of ‘when’ not ‘if’ mortgage rates will rise. It’s in the interest of the millions of homeowners enjoying exceptionally low mortgage payments to think ahead now and ask themselves by how much would rates need to rise, to seriously impact their lifestyle. Anyone who would struggle to get by on an interest rate of just four or five per cent should really act now.”

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