MSE NEWS: NatWest launches lowest 5-year fix as mortgage rates fall

oldvicar

Thrugelmir wrote: »

Would you prefer the business to go to a state owned bank or one owned by overseas investors (i.e. HSBC).

I'm not sure I'd call this business, and sadly I think the scheme is allowed to throw money at the likes of HSBC anyway. It would be wrong to limit the aid to just state owned banks - it could drive the others out of business .

If I could choose which banks were to benefit I'd choose Lloyds, just out of personal interest you understand, and hope it would hasten the time when the government could off-load its 43% stake.

stone_king

If you consider the actual cost of adding £2,500 to your mortgage, you'd take at least the 1st year of lets say a 2, 3, 4 or 5yr deal to pay their ''fee'' off.

It's disgusting that they find a way of stinging the majority whichever way they turn.

I worked for Barclays for a while (I finished with them over a year ago). At that time our Mortgage guy was telling me during the ''boom'' he could be making £9,000 per month in commission, bearing in mind too that they were often no or very small set up costs back then! Barclays decided to change all this & by the time I left, instead of getting several hundred pounds for setting up a new mortgage, it'd be more like £40 but Barclays were charging the public £1,000+ for their '''''''''arrangement''''''''' fee.

They're not the only ones. It takes from start to finish a few hours at best for you to apply, be accepted & go through all the checks to get a mortgage if you've no credit history problems etc.. The banks make more than enough money or if they get it wrong & destroy the world's financial system we have to spend the next 40 years bailing those B***ards out.

getmore4less

In my case I would be better off taking no fee product at 3.69% than this. Is a bit of con really. You'd need to be taking out a seriously big mortgage for that to work out cheaper than the already available HSBC no fee 3.49%. So basically it's not a cheaper mortgage at all as there a far better ones that have been around for ages!!

depends what you mean by seriously big

break even after 5years rate for fee free 20y mortgage

£80K £456pm 3.681% close to your 3.69% break even
£100k £567pm 3.536%
£110k £621pm 3.483% close to the 3.49% rate
£150k £842pm 3.342%
£200k £1118pm 3.245%

skiking

I'm in the market at the moment for a remortgage and I got 'excited' about the headline here and in the press of a 'cheap' mortgage rate. The regulators need to factor in the fees (and it has to be done via a broker who also take a fee) when they calculate the APR to enable normal people to compare offers.

The other point is the lazy and inaccurate media reporting (and I also include MSE here!) just jumping on the headline figure and reporting how good the banks are at passing on cheap loans (as in the BBC reporting this morning)

getmore4less

skiking wrote: »

I'm in the market at the moment for a remortgage and I got 'excited' about the headline here and in the press of a 'cheap' mortgage rate. The regulators need to factor in the fees (and it has to be done via a broker who also take a fee) when they calculate the APR to enable normal people to compare offers.

The other point is the lazy and inaccurate media reporting (and I also include MSE here!) just jumping on the headline figure and reporting how good the banks are at passing on cheap loans (as in the BBC reporting this morning)

You can't use APR to compare mortgages properly.

JimmyTheWig

skiking wrote: »

need to factor in the fees ... when they calculate the APR to enable normal people to compare offers.

getmore4less wrote: »

You can't use APR to compare mortgages properly.

I agree that the APR is usually pretty meaningless for a mortgage, but equally I agree with skiking that the fees need to be included to make a comparison.

Personally, I mentally split the fee across the length of the deal and use that to compare mortgages.

skiking

getmore4less wrote: »

You can't use APR to compare mortgages properly.

I thought the APR was brought in to be able to give a balanced interest figure for comparisons - or was that just the regulators spin to convince us normal people that the regulators were on our side rather than the banks

getmore4less

skiking wrote: »

I thought the APR was brought in to be able to give a balanced interest figure for comparisons - or was that just the regulators spin to convince us normal people that the regulators were on our side rather than the banks

Main problem is it is over the full term.

most deals you want to compare over the promotional period.

Best way is to do a like for like and the easiest of these is add the fees and make the mortgage payments the same then see how much is owing after a period of time.

skiking

I remortgaged three years back and I found comparing providers was quite easy based on the tools they had on their websites - I'm also awkward as I have a repayment and interest only mort. Its time to renew and I'm finding it a lot harder to come up with the repayment amounts without phoning them or even worse having to go through a broker.

Its all gearing up to be anti-competitive by making it harder to compare and forcing you to engage personally with the banks where they can use gentle persuasion tactics. I love Bankers!

JimmyTheWig

skiking wrote: »

I thought the APR was brought in to be able to give a balanced interest figure for comparisons - or was that just the regulators spin to convince us normal people that the regulators were on our side rather than the banks

They do, in many, many cases. E.g. overdrafts, credit cards, personal loans. The good thing about an APR is it includes all the fees that you have to pay and gives you the cost of credit.
But for other things, e.g. payday loans, the APR is meaningless as the length of time you borrow for is much more important.

With mortgages, as getmore4less says, the problem is that they _have to_ do the APR calculation over the entire period of a loan. Which is normally 25 years.
So imagine two deals. Both two years fixed. Both no fees.
Deal 1: 2% for two years followed by SVR of 5%.
Deal 2: 3% for two years followed by SVR of 4%.
You are on the fix for two years, the SVR for 23 years. So the APR is going to be mainly affected by the SVR. The APR of deal 1 will be much higher than the APR of deal 2.
But those of us who are happy to "ditch and switch" would remortgage after 2 years on either deal, and so deal 1 would be much better for us.

skiking wrote: »

Its time to renew and I'm finding it a lot harder to come up with the repayment amounts without phoning them

Forget about repayment amounts for now, and concentrate on interest and fees.
My rule of thumb is as follows...

E.g. Loan required: £150,000. Deal: 3.0% fix for two years. Fees: £1,500.
1. Calculate the fees as a percentage of your loan. [e.g. £1,500 / £150,000 = 1%]
2. Split this percentage across the length of the deal. [e.g. 1% / 2 years = 0.5% a year]
3. Add this percentage a year to the annual interest rate. [e.g. 3.0% + 0.5% = 3.5%]
That gives the approximate cost of this deal for the duration of the deal.

It's not totally accurate, but it's a good rule of thumb. Do this for each deal you come across and then concentrate on the best few that you find.