The product offered at up to 65% loan-to-value (LTV) comes with a £1,499 fee and an overpayment facility which allowing repayments worth up to 10% of the capital penalty-free.
The maximum loan cap is £500,000.
Moneyfacts confirmed the 0.99% fix was the lowest rate offered since it began recording product trends.
The deals are available direct and through its restricted broker panel which includes Countrywide, London & Country, Springtide Capital, Alexander Hall and SPF Private Clients.
Yorkshire Building Society and HSBC both launched headline grabbing low rates at the end of last month with two-year fixed mortgages, priced at 1.16% and 1.14% respectively. Despite the battle among lenders to undercut their rivals’ best-buys, brokers still remained sceptical fixed rates would plummet lower than 1%.
The results from a Mortgage Solutions poll, carried out at the start of June last year, revealed 61% of brokers did not expect the market to ever launch a sub-1% fixed-rate mortgage.
Tracie Pearce, HSBC’s head of mortgages in the UK, said: ‘”We are constantly looking at ways in which we can deliver value to our mortgage customers and from time to time we have the opportunity to launch a rate with a difference.”
HSBC may be the only lender so far to continue its trajectory down the interest rate curve but it is not alone in offering borrowers historically low mortgage deals.
Figures released by property services firm LMS, showed that 56% of remortgagors took advantage of improved interest rates in May, while a third were able to reduce their monthly outgoings by up to £500, by switching deals.
Last week, the Bank of England’s Monetary Policy Committee returned a unanimous vote to hold interest rates at 0.5% for the 88th consecutive month.
