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    • gemma.zhang
    • By gemma.zhang 20th Apr 15, 11:55 AM
    • 302Posts
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    gemma.zhang
    HSBC 1.99% 5yr fixed - change or not
    • #1
    • 20th Apr 15, 11:55 AM
    HSBC 1.99% 5yr fixed - change or not 20th Apr 15 at 11:55 AM
    We have a big mortgage of over 300k, and currently on life time tracker with HSBC, which is 1.49%+BOE. Saw the news that HSBC has just released new low 5 yr fixed rate product at 1.99%, which is the same as what we are paying now.. ok, aparte from the high arrangment fee of £1,500.

    So tempted to switch to fixed. God knows what's to happen with the economic / mortgage in the coming months & years. It seems to be dropping from winter last year every single month.

    What do people think ?
Page 1
    • sebtomato
    • By sebtomato 20th Apr 15, 12:08 PM
    • 562 Posts
    • 142 Thanks
    sebtomato
    • #2
    • 20th Apr 15, 12:08 PM
    • #2
    • 20th Apr 15, 12:08 PM
    Check if they don't have loyalty deals for existing customers. I know First Direct have fee-free deals for their current mortgage customers.
    • pinkteapot
    • By pinkteapot 20th Apr 15, 12:20 PM
    • 6,155 Posts
    • 7,922 Thanks
    pinkteapot
    • #3
    • 20th Apr 15, 12:20 PM
    • #3
    • 20th Apr 15, 12:20 PM
    No-one can tell you what to do because no-one knows what interest rates will do.

    How long will it take for the £1,500 to be worth it, if interest rates rise?

    Use this page: http://www.theguardian.com/money/mortgage-calculator

    If I assume your mortgage is £320k over 20 years (total guesses), your current repayments with your 1.99% tracker mortgage are £1,617. They'd be the same initially on the fix.

    If they increase the rate once (by 0.25%) your repayment goes up to £1,655, or £38 per month. It would take 3.5 years for you to recoup the £1,500 arrangement fee. Half that if the base rate increases by 0.5%.

    It's simply a gamble, and you make your choice based on your guess about where interest rates will go. In five years time, whichever option you choose, you may be better or worse off, financially.

    The biggest question may be how comfortable you are with your current repayments and how scared you are of them increasing. You might want to switch for the certainty.

    For what it's worth, we're on the same HSBC lifetime tracker as you and we're not going to fix. I take low fixed rates as an indication that the economists who work at HSBC don't think interest rates are going to increase much anytime soon. But our monthly budget is pretty relaxed - we can easily afford it if rates increase - so we can be relaxed about it.
    Last edited by pinkteapot; 20-04-2015 at 12:22 PM.
    • gemma.zhang
    • By gemma.zhang 20th Apr 15, 1:30 PM
    • 302 Posts
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    gemma.zhang
    • #4
    • 20th Apr 15, 1:30 PM
    • #4
    • 20th Apr 15, 1:30 PM
    Thanks for the link. Will take a look.
    I understand what you mean. It does look like rates are not to rise soon or steeply in the next 5 years. It's like paying 24/month to buy an insurance for the next 5 years, such a gamble game
    • Thrugelmir
    • By Thrugelmir 20th Apr 15, 1:41 PM
    • 53,790 Posts
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    Thrugelmir
    • #5
    • 20th Apr 15, 1:41 PM
    • #5
    • 20th Apr 15, 1:41 PM
    Do you have a 40% deposit?
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • gemma.zhang
    • By gemma.zhang 20th Apr 15, 1:44 PM
    • 302 Posts
    • 57 Thanks
    gemma.zhang
    • #6
    • 20th Apr 15, 1:44 PM
    • #6
    • 20th Apr 15, 1:44 PM
    Do you have a 40% deposit?
    Originally posted by Thrugelmir
    Yes, I do.
    • SamDude
    • By SamDude 20th Apr 15, 2:35 PM
    • 209 Posts
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    SamDude
    • #7
    • 20th Apr 15, 2:35 PM
    • #7
    • 20th Apr 15, 2:35 PM
    After the 5 years are up, the £1500 'insurance' will have lapsed and you may be in a worse (or better, but less likely) position with the interest rate.

    I would stick with the tracker and if you have the £1500 available for the arrangement fee, put it aside and collect the 2/3%+ interest on it.

    I have the same 1.49%+BOE tracker with HSBC and intend to stick with it.
    • pinkdalek
    • By pinkdalek 20th Apr 15, 7:02 PM
    • 1,216 Posts
    • 703 Thanks
    pinkdalek
    • #8
    • 20th Apr 15, 7:02 PM
    • #8
    • 20th Apr 15, 7:02 PM
    Look at offers with no arrangement fee. The interest rate may be higher but only slightly.
    You don't save a great deal in money over the term of the deal by paying this high fee!
    • marathonic
    • By marathonic 20th Apr 15, 7:15 PM
    • 1,758 Posts
    • 1,314 Thanks
    marathonic
    • #9
    • 20th Apr 15, 7:15 PM
    • #9
    • 20th Apr 15, 7:15 PM
    Look at offers with no arrangement fee. The interest rate may be higher but only slightly.
    You don't save a great deal in money over the term of the deal by paying this high fee!
    Originally posted by pinkdalek
    0.5% of £300,000 is £1,500 so if such a mortgage holder is saving 0.5% per year over a 5 year term, then there's a significant saving to be gained by paying the high fee. Even 0.2% - 0.3% lower rates would make the high fee worthwhile.

    I do agree that it gets less worthwhile with lower mortgage amounts but, at £300,000 a high fee with a low rate will almost always beat no fee with a higher rate.
    • getmore4less
    • By getmore4less 21st Apr 15, 7:03 AM
    • 28,782 Posts
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    getmore4less
    Fill in the correct info

    to do the today compare you add/remove the fees and look what rates make the payment/end amount the same.

    so lets go with £300k over 20 1.99% fees £1500 paying aprox £1517

    take the fix and pay the fees or stay on tracker and pay the fees off the debt.

    paying £1517
    £300000 @ 1.990% in 5 years £235,739
    £298500 @ 2.108% in 5 years £235,734

    if rates don't move for 2 years

    £298500 @ 1.99% over 2 years £273,499
    £273499 @ 2.20% over 3 years £235,740

    So a single 0.25 rise in the first 2 years will make the fix come out better
    (leave it to the reader to do years 3 and 4)

    Which is not that surprising.


    If rates dont move for 5 years
    £300000 @ 1.99% in 5 years £235,739
    £298500 @ 1.99% in 5 years £234,083

    The move to the fix could cost you upto £1656.


    remember the OP numbers will be different



    Follow on rates will be the key to this decision

    Will there be trackers/fixes that can compete with a base+1.49% in 5 years time.
    • gemma.zhang
    • By gemma.zhang 21st Apr 15, 9:20 AM
    • 302 Posts
    • 57 Thanks
    gemma.zhang
    Thanks everyone!
    That's very true. Once there is one/two rate rise. All the fixed rate product will be more expensive, tracker rate would be cheaper.

    It's difficult choice here. I will wait for a while to see if other lenders are following suite or not.
    • audigex
    • By audigex 21st Apr 15, 10:06 AM
    • 549 Posts
    • 448 Thanks
    audigex
    I think you've hit the nail on the head - these super cheap fixed rate deals are being used to try to tempt people away from the best trackers.

    Give it a few years when the rates start to rise and you won't find anything close to BOE+1.49%, and the fixed rates will rise too.

    None of us know the long term outlook, but IMO the fix doesn't make sense with the current size of your mortgage. If you had 10 years left it might make sense to bet on BOE rate rises and fix your term, but with 300k left I'd rather keep that 1.49% over BOE.
    • strawberries1
    • By strawberries1 20th Mar 17, 1:46 PM
    • 579 Posts
    • 132 Thanks
    strawberries1
    Apologies to those who don't like an old thread resurrected.

    I'm posting here as I need the wisdom and experience of those who have posted on this thread.

    I need your help please.

    I'm having difficulty calculating and comparing mortgages in order to make an informed decision.

    Mortgage likely to be £190,000 on £292,000 ppty.
    2yr fixed at 1.74% and 5yrs fixed 2.14% are the two I'm trying to decide on. The 5yr has a £1,000 fee and the 2yr has a £500 refund.

    I'll appreciate your thoughts on which to go with.
    Thank you.
    • kingstreet
    • By kingstreet 20th Mar 17, 2:18 PM
    • 31,455 Posts
    • 16,811 Thanks
    kingstreet
    New thread started by last poster, so ignore this and move to here with help;-

    http://forums.moneysavingexpert.com/showthread.php?p=72280231#post72280231
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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