The lowest mortgage seen for decades comes from HSBC, not renowned for passing on the Bank of England lower rates to tracker customers quickly, this time they have broken the piggy bank. But like everything there is a price and that price is only afforded by customers who are already fairly well off.
This is a 2 year fixed term deal. HSBC’s exposure is low and this mortgage still only represents a figure 1.49% over the base rate.
The deal is only available to customers who have:
1) More than £50,000 in the bank as savings.
2) Or a £250,000 mortgage and a salary of £75,000. We assume that this is pure salary and a bonus would not be included in this amount.
3) Crucially the LTV (loan to value) ratio is massive at 40%.
Few rate reductions have reflected the recent full 0.50% base rate cut, however, as banks continue to enhance their profit margins.
Rates are coming down but the banks are ‘one bitten twice shy’ and only lending on good bets which is clear to see from the deal above. Not many people would be able to secure such a loan, especially those under the age of 30.
However HSBC do offer tracker rates of 4.09% for borrowers with a deposit of 25% or 3.45% with a deposit of 40%. HSBC’s cheapest two-year fixed rate is 3.99%. Still cheap money in comparison to the late 1980’s.
Woolwich passed the full half point cut to its five-year fixed rates but cut its tracker rates and shorter term fixed deals by 20 basis points. Meanwhile Abbey cut rates by around 30 basis points.
Abbey and Woolwich restricted their best new deals to customers with deposits of 40 per cent. Abbey, for example is offering these customers a two-year fixed rate of 3.99 per cent with a £995 fee.
New rates often carry extremely large fees. Abbey is offering a 3.99% rate to customers with deposits of 25% but the fee is £1,995. Some of A&L’s new rates will have fees of 2% of the loan. The group, whose mortgage arm has been taken over by the government, is encouraging customers to leave as it said it was no longer able to provide any new lending and may not be able to offer competitive deals in the future.
ANALYSIS – £250,000 house using the HSBC mortgage outlined above would cost £106,500 to move in:
|Deposit 40% of £250,000:||£100,000|
|Loan fee (maybe?):||£750|
|Furniture and White goods:||£2,500|
|Sundry / moving:||£250|
Please let us know whether you have found any other great HSBC mortgage deals.