Banks fight back in mortgage price war Mortgage lenders engaged in fresh skirmishes on rates this week as the battle to win new borrowers in a flagging market intensified. HSBC is offering its lowest-ever five-year fixed rate at 2.48 per cent for borrowers with a 40 per cent deposit. The deal is available from Monday and carries a fee of £999. The bank also slashed the fee on its 0.99 per cent two-year discount product from £1,999 to £1,499. The discount deal also requires a 40 per cent deposit. Rates are already at long-term lows across the industry. HSBC's five-year rate undercuts the lowest current competitor in the category, Leeds Building Society's 2.59 per cent five-year fixed rate mortgage, which requires a deposit of at least 35 per cent and a £1,999 fee. Other lenders cutting their rates included Barclays/Woolwich, which brought out a two-year fixed-rate mortgage at 1.79 per cent and a five-year deal at 2.79 per cent, both available to borrowers seeking up to 70 per cent of the property's value. It has also introduced a two-year tracker mortgage at 0.79 per cent above Barclays" bank base rate, implying an actual rate or "pay rate" of 1.29 per cent. Borrowers have the option to switch into a fixed-rate deal when the base rate begins to go up. Aaron Strutt, product manager at broker Trinity Finance, said tracker mortgages were popular with less risk-averse borrowers and private banking clients. Now that there is less talk of an increase to the Bank of England base rate, the lenders feel more comfortable offering cheaper tracker rates. But he advised customers to choose a deal that allows them to lock into fixed rates at any time. Santander also joined the fray on two-year fixed-rate mortgages, with a "lowest ever" rate of 1.84 per cent on loans up to 60 per cent of the home's value and a £995 fee for customers remortgaging. It has shaved the rate on its two-year tracker by 0.3 percentage points, to 2.0 per cent. The loan is available on a 20 per cent deposit. Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "With an eye on their year-end targets and pipeline for next year, lenders are offering some fantastic mortgage rates to attract borrowers." Heightened competition between lenders was reflected by news this week that Nationwide had seen a drop of nearly £1bn in gross new mortgage lending in the six months to September. Graham Beale, chief executive of Nationwide, blamed the fall in lending to banks" renewed appetite for the home loan market and the effects of tighter affordability rules.