MSE News: Mortgage rates at historic lows – can you save? 18 February 2015 at 2:55PM in Mortgages & endowments 7 replies 1.9K views

Former_MSE_Helen

Many people can slash £1,000's a year off their mortgage costs, so everyone should check if they can save now...

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Mortgage rates at historic lows – can you save?




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KTF

No mention at all that you should take into account the early redemption penalty (if applicable) and/or that could wipe out any 'savings' that could be made by switching?

agarnett

Why do we in the UK allow ourselves to so often be suckered into long term contracts with such short-lived enticements as 2 year fixed rates on something we actually need to maintain for half a lifetime ?

Does the rest of the world play such silly games with serious-minded consumers?

What fixed rate deals are available in Europe - that might be the really interesting question.

Thrugelmir

Headline interest rates tap into human psychology. Lenders of course are trying to ensnare the better risks. As once the mortgage balance begins to reduce the possibility to save diminishes. Not aided by the costs of switching lenders outweighing the benefits.

Pincher

Currently, HSBC is doing a two year fixed at 1.19%, and a two year tracker at 0.99%. This would allow a significant amount of overpayment for people in a position to do so.


You could also look at it in terms of longer term fixes have higher rates for the safety of the lender. There were some tasty 10 years fixes recently, which seem to have disappeared, presumably due to lack of interest. Why pay more, as it were.


Recent stories have also highlighted the difficulty in porting existing deals. If you were locked into a five
year fix, and you want to move house early, the lender says you can't port due to MMR criteria, even though they said you could when you took out the loan. If you cancel before five years is up you pay an early exit penalty.


I buy and hold for the long term, so five year fixes do me fine, but there are people who want to get married, have kids, and move through studio flat, two bedroom flat, three bed semi etc. as quickly as possible.

KTF

Pincher wrote: »

Currently, HSBC is doing a two year fixed at 1.19%, and a two year tracker at 0.99%. This would allow a significant amount of overpayment for people in a position to do so.

Its a two year discount, not a two year tracker.

Discount: https://www.hsbc.co.uk/1/2/mortgages/products?pcode=A008000921000000000000000000

Fixed: https://www.hsbc.co.uk/1/2/mortgages/products?pcode=A004035976000000000000000000

On both products you can only over pay up to 20% of your monthly payment and they have a chunky fee so suitable for larger mortgages only.

Youknowme_2

KTF wrote: »

No mention at all that you should take into account the early redemption penalty (if applicable) and/or that could wipe out any 'savings' that could be made by switching?

I agree, in our circumstances we have just shy of £60k outstanding on a fixed term rate of 5.39%, but have a ERC of circa £1,800 until March 2016 when fix ends. We have also overpaid to our limit for calendar year of 2015

Some enticing rates out there at present which suggests taking the hit on the ERC and moving so can take advantage of further overpayments BUT that £1,800 feels like throwing money away just for this pleasure. The saving is marginal.

Pincher

KTF wrote: »

Its a two year discount, not a two year tracker.

Discount: https://www.hsbc.co.uk/1/2/mortgages/products?pcode=A008000921000000000000000000

Fixed: https://www.hsbc.co.uk/1/2/mortgages/products?pcode=A004035976000000000000000000

On both products you can only over pay up to 20% of your monthly payment and they have a chunky fee so suitable for larger mortgages only.

So they saw me coming a mile off.


No wonder I could never get a good 0% Balance Transfer deal out of HSBC. Poor Barclaycard, they have £11k they won't see for another two years yet.