The real price of a mortgage: 6.49%

geoffky

Forget interest rates at 0.5%. First time buyers are paying the highest rates in years - which is why talk of a housing market recovery is bunk

What's the most popular mortgage in the market at the moment? Perhaps you've read about HSBC's 1.99% deal? Or you know of people on tracker loans who are paying virtually nothing for their home loans? Well, the truth is out. Countrywide, Britain's biggest estate agency, revealed this morning the most popular mortgage taken out by buyers at its near-1,000 strong chain of branches.
No, it's not down at 1.99%, indeed it's nowhere near that level. "The most popular mortgage product applied for by nearly 800 Countrywide consultants across the UK required a deposit of 10% with an interest rate of 6.49%," said the company.
This fact stands out in huge contradiction to the guff put out by high house price promoters keen to convince us that the market is "recovering". Only last week, Halifax was talking about affordability falling below its 25-year average. Really? Not when the true rate paid by buyers is this high. This recovery, such as it is, will hit the buffers of affordability constraints almost immediately.




http://www.guardian.co.uk/money/blog/2009/sep/14/mortgage-rates-affordability-house-prices

Richard_Webster

I don't think that HSBC are on Countrywide's panel of lenders!

Running_Horse

I think this is more relevant in the mortgage forum, or the boring house price obsessives forum.

haras_nosirrah

HSBC aren't on anyones panel as they don't deal with brokers

What a silly article as it doesn't point out the differences between the two rates and to average Joe indicates that the brokers are not recommending the best product but are putting people onto the higher rates. Lets compare the two products

The 1.99% is a tracker with a 40% deposit needed and £1299 fees

the 6.49% is a 5 year fixed with a 10% deposit needed and no fees with £500 cash back.

Surely no comparison can be made between the two as I am sure that if the average first time buyer had a 40% deposit they would go with HSBC but that isn't the case. Also there are very few trackers available currently with a 10% deposit (if any from memory - on day off today)

Perhaps the fact that the 6.49% rate really says is that the first time buyers are coming back (hence the most sourced product being a 90% ltv product) and that the lenders at the high LTV's are making a large amount of profit although as this is a 5 year fixed I wouldn't imagine we will have a 0.5% base rate for the next 5 years it may not be too bad in the long run.

IveSeenTheLight

Running_Horse wrote: »

I think this is more relevant in the mortgage forum, or the boring house price obsessives forum.

Agreed, Georffky, you should pop over to this thread where there is more discussion on the subject http://forums.moneysavingexpert.com/showthread.html?t=1946405



For anyone else interested, I recently found these mortgage products

http://www.britannia.co.uk/home/_sit...xed-rates.html

Britannia - 10% deposit, 5 year fix from 6.19%
- 25% deposit, 5 year fix from 5.44%


http://www.hsbc.co.uk/1/2/personal/m...FrUj:11j74lc1v

HSBC - 10% deposit, 5 year fix from 6.49%
- 25% deposit, 5 year fix from 5.59%

I doubt you will get much more competative than those

keith969

haras_nosirrah wrote: »

Surely no comparison can be made between the two as I am sure that if the average first time buyer had a 40% deposit they would go with HSBC but that isn't the case. Also there are very few trackers available currently with a 10% deposit (if any from memory - on day off today)

Maybe, but HSBC also offer a 90% mortgage for FTB's at 3.89%. That's a lot less than 6.49%.