HSBC has announced its details of its Help to Buy mortgages with the lowest rates announced so far under the scheme.
This suggests rates are likely to fall lower as lender competition intensifies.
But HSBC's rates are still more expensive than the cheapest 95% LTV deals recently launched outside the scheme.
From next Monday, HSBC will launch two fixed-rate mortgages up to 95% LTV, undercutting rates from high street rivals RBS/NatWest and Halifax.
HSBC is launching a two-year fixed rate charging 4.79% and a five-year fixed rate at 4.99%. Both deals are available up to 95% LTV and have a £99 booking fee.
The two-year fix is cheaper than a rival Help to Buy offering from RBS/NatWest, which charges 4.99%, although with no product fee.
HSBC's five-year fixed rate is also cheaper than the RBS/NatWest five-year fix, which charges 5.49%, again, with no fee.
But HSBC's rates are beaten by Yorkshire Building Society, which has just announced an astonishing 36 new mortgages up to 95% LTV outside the Help to Buy scheme.
Yorkshire's rates start at just 4.59%.
Cambridge Building Society recently announced a first-time buyer 95% LTV mortgage that charges just 3.99% in the first year, although that subsequently rises to 4.89% in years two and three.
HSBC's Help to Buy mortgages are restricted to customers looking to buy a property, but may be opened to remortgage customers at a later date.
HSBC said it will assess all borrowers to ensure they could afford repayments at an interest rate significantly higher than the Bank of England base rate.
Brendan Cook, head of retail banking and wealth management for HSBC UK, said: “We want to support our customers, whether they are buying their first home or moving up the housing ladder. In order to protect them, we want to ensure they can afford their repayments when interest rates rise.”
HSBC will also require a minimum deposit of £10,000, to safeguard 90% and 95% LTV borrowers against future house price fluctuations.
Its deals aren't available through brokers.
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