Tracker mortgages when the base rate rises

aroominyork

I have HSBC's interest only base+1.49% lifetime tracker at an LTV under 40%. I'm attracted by their 2 year 1.49% (£299 fee) which would save me about £1400 over two years. My concern is whether, when the fix ends, I will regret having dumped my lifetime tracker. So my question is: from past experience what % over base do tracker rates tend to be when the base rate it a more realistic long-term level (ie say it is 1.5% or above in 2017)?

Thrugelmir

How many years does your mortgage have to run. A 2 year fix is a short term option. What are the odds of obtaining a life time 1.49% tracker ever again? As base rate rises mortgage interest rates will increase across all products not just trackers.

aroominyork

It's a lifetime tracker on interest only, running to December 2025 (I am 53). Which raises another question: in 2025, will they automatically demand the capital is re-paid?

Re your question about the odds of obtaining a 1.49% tracker again: that's exactly my question! What is the typical tracking increment in 'normal' times?

getmore4less

There are cheaper trackers available now.

They will be wanting the debt paid.

getmore4less

1400 saving over 2 years 140k.

Hope you are saving for that. Over £1k pm needed.

silvercar

I have HSBC's interest only base+1.49% lifetime tracker at an LTV under 40%.

So your pay rate is currently 1.99%.

I'm attracted by their 2 year 1.49% (£299 fee) which would save me about £1400 over two years.

Saving £1400 a month? A year? or over the 2 years?

If you really mean over the whole 2 years, then 299+1400= 1699. Divide by 24 is £71 a month. Implying your mortgage is around £170,000.

Thrugelmir

aroominyork wrote: »

It's a lifetime tracker on interest only, running to December 2025 (I am 53). Which raises another question: in 2025, will they automatically demand the capital is re-paid?

You've entered a contract agreeing to repay the debt at the end of the mortgage term. You need to start considering your options now. Every month you wait will simply compound the problem.

aroominyork

Yes, silvercar, mortgage is c.£170k. And saving is c.£1400 over two years. And about repaying the capital in 2025, I have assets which would allow that.

So back to my original question, is a lifetime tracker of base + 1.49% something I would, in 2017, regret having let go in order to make a quick £1400?

Thrugelmir

aroominyork wrote: »

So back to my original question, is a lifetime tracker of base + 1.49% something I would, in 2017, regret having let go in order to make a quick £1400?

Best lifetime tracker rate is now 1.99%. That's with a 60% LTV and a £999 fee. (2.49% without a fee).

Jam today isn't always as appealing as it seems.

silvercar

aroominyork wrote: »

Yes, silvercar, mortgage is c.£170k. And saving is c.£1400 over two years. And about repaying the capital in 2025, I have assets which would allow that.

So back to my original question, is a lifetime tracker of base + 1.49% something I would, in 2017, regret having let go in order to make a quick £1400?

I don't see the gain as something worth giving up the lifetime tracker for. But that is my personal opinion. The risk of no decent rates being available in 2 years time would be too great for me.

aroominyork

So if trackers are now around base + 1.49%, what were they typically when the base rate was 4%-5% between say 2004-2008?