HSBC has introduced lowest ever mortgage rate of 1.99 per cent, in a move that signifies HSBC's intention to control a larger share of mortgage market.

But, HSBC's new mortgage deal requires a deposit of at least a 40 per cent and comes with an arrangement fee worth 1,199 pounds.

The low rate lasts for a two-year period and is set at the 1.99 per cent discount to the standard variable rate of 3.94 per cent.

However, Andrew Montlake of independent mortgage brokers Coreco said the new deal would not suit all.

He further said, "HSBC's tactic is to create a buzz, take in as many applications as possible and then embark on a ruthless cherry-picking exercise whereby it only lends to those it considers worthy."

Those who can not afford any rise in mortgage payments should opt for only fixed-rate deal because when the interest rate moves up their mortgage repayments will also follow suit.

Both, the key inter-bank lending rate, upon which variable rate deals are based and Swap rates, upon which fixed rate deals are based have plunged in the recent past. Other lenders such as the Woolwich and Cheltenham & Gloucester have also trimmed down mortgage rates.