First ever sub-1% five-year mortgage fix launched by Nationwide

Thrugelmir

SJ_ said:

.is it a PR stunt over value?

Nope. It's a commercial decision to lend more to fewer borrowers, i.e. target a specific market. Which is cheaper in terms of administration processing cost. Also requires fewer staff to be in the office, which will be the case over the summer holidays. . 

csgohan4

Thrugelmir said:

SJ_ said:

.is it a PR stunt over value?

Nope. It's a commercial decision to lend more to fewer borrowers, i.e. target a specific market. Which is cheaper in terms of administration processing cost. Also requires fewer staff to be in the office, which will be the case over the summer holidays. . 

it's also risk management, lesser admin costs so can afford to give a lower % to those with perceived lower chance of Repo

Thrugelmir

csgohan4 said:

Thrugelmir said:

SJ_ said:

.is it a PR stunt over value?

Nope. It's a commercial decision to lend more to fewer borrowers, i.e. target a specific market. Which is cheaper in terms of administration processing cost. Also requires fewer staff to be in the office, which will be the case over the summer holidays. . 

it's also risk management, lesser admin costs so can afford to give a lower % to those with perceived lower chance of Repo

"Repo" can happen to anyone. Job loss, sudden death etc. Low LTV means no capital loss. What isn't recouped is the cost of having a full "repo" department and legal advisors on hand. 

FirstTimePlx

JonMitchell said:

FirstTimePlx said:

"

This new mortgage is only available if you've got at least a 40% deposit or equivalent equity in your home – plus the fee is expensive

"

I am going to assume that this will stump if not most of the applicants. Only for a select few.

Not to mention, must borrow a minimum of £275K or £300K (re-mortgage) on an average property price of £458,000.

Property price above the norm for most applicants too.

If you look closely and calculated the difference between this 0.99% (fee £1499, min loan £275K) vs 1.04% (fee £999, min loan £25K) from Nationwide. The difference over a 5 year period for example is negligible, only a £125 difference between the two products. Therefore the sub 1% might be for a smaller audience but if one look at other products from the same lender, one is not losing much at all. 

Don't be tempted by 0.xx% without calculating the small prints    

Not sure if you noticed, the bold statement (in full) is quotes from the article that I pinched.

The "plus the fee is expensive" was a side note. Irrespective of fee costs, I was trying to point out that it was minimum 40% deposit, which is huge for FTB.