Fixed rates - why have banks rates not dropped since BOE base rate drop?

wrcallar

I'm just about to remortage. As we are going for a 5 year @ 70% LTV I wanted to wait it out to hear if the BOE rate drops. It has... great! But the banks aren't lowering their fixed rates!!! My HSBC mortgage offer only lasts untill the 29th of this month (at a rate 0.1% below what is currently being offered and so I don't want to lose it) and I'd rather not start the whole process again.

Has anyone read anything about when the banks actually pass on the 0.25% drop to new customers!?!??

Jox

I got a letter yesterday from my current mortgage company saying the the new rate would take effect from September (I'm on a base rate), so it's going from 2.5% to 2.25%

AnotherJoe

Why are you going for a five year ?

Contemptuous

Fixed rates aren't linked to the BoE base rate. Trackers are.

marathonic

I'd be very surprised if a 5-year fix dropped by the full 0.25%. In fact, they had already dropped in the run-up to this rate cut because the markets anticipated it.

If your current offer is for 0.1% below what's available now, I'd continue on with it as opposed to waiting for a further cut that may never happen.

lee111s

What rate are you on now?

Why 5 years?

Have you considered a tracker?

What's the remaning balance of the mortgage?

Thrugelmir

wrcallar wrote: »

But the banks aren't lowering their fixed rates!!!

Has anyone read anything about when the banks actually pass on the 0.25% drop to new customers!?!??

Lenders need a corresponding in 5 year deposits to fund. Base rate is variable. Fixed rates are what the label on the tin is.

wrcallar

Cheers for the replies.

We were going for the 5 year as in my head it's all really cheap at the moment, surely it can't go down much!? Going for a 5 year is actually completely against something I would normally do as I'm a gambler at heart (although I don't gamble gamble...). I've heard stories of the 80's where it's been up to 10% and none of us know that something like this isn't right around the corner? "I wish back in 2016 I'd taken a 5/10 year mortgage when it was at a measley 2%!!"?

House is valued at 300k, mortgage currently is 195k, looking to release 15k equity to renovate so will bring it to 210k (70% LTV). We would forfeit releasing the 15k if 65% LTV made much difference but it doesn't from what I've seen. This was with a 23 year mortgage.

Mortgage we have agreed is 2.24%, 5 years, 1k fee. Already paid a damned £200 valuation fee for some old chap to turn up for 5 minutes to tell me what I already know...

Hoping to stay with HSBC for ease. Currently reverted to the SVR as of last month but have no intention of staying on it!

I notice a few of you questioned why the 5 year which has made me edgy that it's against the current 'norm'!? Is this so? I have a telephone appointment tomorrow morning so all advice tonight would be appreciated!

SavingSteve

2 years fixes are cheaper, rates aren't expected to rise in the next two years. So 2 from years now, theorectically, you'll be able to secure a 2 or 5 year fix at current rates. All in theory of course.

You'll have to pay fees again in 2 years, but as an example, if you stick to 65% LTV, HSBC will give you 0.99% with a £1.5k fee. On a £195k (65% LTV) mortgage the 0.99% saves you £4.4k compared to the 2.24%, even taking into account the higher fee. Even spending another £1.5k fee in two years that's still a £2.9k saving, not to be sniffed at.

wrcallar

Would a tracker from HSBC be a good idea? 1.94% , £999 fee, for the entire term! So BOE +1.69%. Will there be a hefty fee for leaving the mortgage though? I have 23 years left...

Although Nationwide's 1.39%, £999 fee, 2 years looks pretty amazing.

Too many choices.

wrcallar

SavingSteve wrote: »

2 years fixes are cheaper, rates aren't expected to rise in the next two years. So 2 from years now, theorectically, you'll be able to secure a 2 or 5 year fix at current rates. All in theory of course.

You'll have to pay fees again in 2 years, but as an example, if you stick to 65% LTV, HSBC will give you 0.99% with a £1.5k fee. On a £195k (65% LTV) mortgage the 0.99% saves you £4.4k compared to the 2.24%, even taking into account the higher fee. Even spending another £1.5k fee in two years that's still a £2.9k saving, not to be sniffed at.

This makes a lot of sense to me. Wish I had your quick maths!

0.99% is crazy. Time to google!