End of the road for super-low trackers

Thrugelmir

payless wrote: »

for new business you are looking at it starting at about 2.5% above base! ( not done a full search though) - with many providers much higher

Of course for existing term tracker customers - there are on the original deal - whilst maybe there are cheaper (perhaps if paid a bigger arr fee) I remember doing some at base + 0.17%

Seems we are heading back to the more normal historic 2% above BOE for mortgage rates. Plus the increased cost of FSA levy's that lenders have to pay and have passed the cost directly to borrowers.

I took a lifetime tracker last time as I was fed up with paying product fees every few years. As all they seemed to do was escalate up and up. Now the product fees seem little more than the old Mortgage Indemnity fees that were charged on high LTV lending but extended to everyone now.

payless

Jonbvn wrote: »

I would be interesting to know the split between those of lifetime trackers, and those on limited term trackers.

When we went onto a lifetime tracker last year (before the big rate cuts), I recall that lifetime trackers seemed to be very popular with the bigger lenders (HSBC & Barclays/Woolwich). [Anecdotal Only]

Yeah , these must be a nightmare for the lenders who took volume business as now claim they now have to charge 2.5-3 % above base !, so the old ones must be hurting

Gorgeous_George

It's like diving into the sea. You know it will be cold and salty but it is still a 'shock'.

In 2007 they would have expected to switch mortgages to a new low rate. You can still get 4% or lower on variable rate BTL and residential mortgages (subject to an arrangement fee). Even at 6%, the shock should be survivable. There has never been a better time to be a borrower.

My BTL is +0.89% for life and my residential (offset) is +0.74% for life. I wish I'd borrowed more.

GG

silvercar

By taking a lifetime tracker at base + a little I save say 2% (as against taking a lifetime tracker at base + 2-3% now). So by buying in 2006 I save 2% of my mortgage over its lifetime but I lose if I could have bought cheaper now.

Ignoring compound interest and the fact I've used some of the reduction to reduce the mortgage, 2% x 25 yrs is 50%, so I save half the value of my mortgage by the end of the 25 years. So the equation is whether I could have bought my house now with half my mortgage (+the same equity). For anyone with 80% LTV that would equate to a 40% drop on 2006 prices, so the answer would be no, generally.