Woolwich sold us up the river...so now HSBC...DIscount or Fixed?

Fitzkepp

Hi all,

Potted history is thus; we secured an AIP from Woolwich/Barclays in late Feb, got our certificate etc and started house hunting in earnest.

During that time they have re-appraised their rates and offers, and the long and short is the mortgage we had settled on - 4.39% 2 yr fixed 90% LTV - is no longer available.

It seems they've taken it out of the equasion and replaced with two, more expensive (4.99% 3yr fixed) HTB deals. Understandably, I am miffed - but that's life.

During our identifying what mortgage to go for we'd kind of got indoctrinated to the best thing for us being first timers was a fixed deal. However when looking at products now, it seems HSBC are offering what looks like a good option for us in a 2 Year Special Discount at 2.89% (based on current HSBC variable rate).

I'm a little nervous of Discount trackers like this, and the alternative is a fixed 2 yr at 3.59%...

Can anyone highlight any inherent risks in a Discount product like this, or is the Fixed probably the safer bet with base rate likely to increase?

ACG

Take a look at their rates again tomorrow.

Theyre bringing back at 90% product which i think will be cheaper than the one you originally looked at.

Mattygroves2

Could you afford the repayments if interest rates increased by 2% ? Or are your finances tight and you need the security of knowing for definite how much it will be for the next 2 years ?

You should be able to do a spreadsheet to show how much interest rates would have to go up by (and when) to make the fixed cheaper over the two year period. Then if you save the difference in the monthly payments whilst it is cheaper you'll have a buffer when interest rates go up. This does take discipline though.

You also need to look at how the HSBC rate is worked out - does it track the base rate or can they raise it even though the base rate hasn't changed ? If the rate is HSBC's decision then it would be worth trying to get the history to see how it relates to the base rate rises.

Fitzkepp

ACG wrote: »

Take a look at their rates again tomorrow.

Theyre bringing back at 90% product which i think will be cheaper than the one you originally looked at.

Barclays? Fantastic timing if so as we're set to make an offer! Out of interest how do you know? The lady I spoke to last week for them basically said "unlucky"

Fitzkepp

Mattygroves2 wrote: »

Could you afford the repayments if interest rates increased by 2% ? Or are your finances tight and you need the security of knowing for definite how much it will be for the next 2 years ?

You should be able to do a spreadsheet to show how much interest rates would have to go up by (and when) to make the fixed cheaper over the two year period. Then if you save the difference in the monthly payments whilst it is cheaper you'll have a buffer when interest rates go up. This does take discipline though.

You also need to look at how the HSBC rate is worked out - does it track the base rate or can they raise it even though the base rate hasn't changed ? If the rate is HSBC's decision then it would be worth trying to get the history to see how it relates to the base rate rises.

Finances are that tight, but great advice on a spreadsheet and I'll do just that

ACG

Fitzkepp wrote: »

Barclays? Fantastic timing if so as we're set to make an offer! Out of interest how do you know? The lady I spoke to last week for them basically said "unlucky"

My account manager sent me an email on wednesday saying they are making changes to their products, some are being withdrawn, some are being replaced and some added.

Fitzkepp

ACG wrote: »

My account manager sent me an email on wednesday saying they are making changes to their products, some are being withdrawn, some are being replaced and some added.

Well really appreciate the heads up, it will make life a lot easier as an existing customer of theirs. I'll check tomorrow lunch and see of they're up on the site

Fitzkepp

Well, you were right on them adding a 90% LTV deal - however unfortunately it's half a % more expensive than the original and 5 years fixed!

5yrs - 4.99% followed by BBBR + 3.39%...so the waters aren't really any clearer

I may be missing something here but Barclays current offer then is a 90% LTV on 4.99% Fixed for 5 years, or a HTB mortgage on the same int rates fixed for 3 years.....the main other difference is the Fixed has a follow on half a % lower than the HTB.

I can only assume this means Barclays feel interest rates will do nothing but go up in the coming months/years and thus they feel the opportunity to lock it down now would be attractive?