HSBC and Nationwide drop rates again significantly...switch to a fix? What can we read into this? 7 February at 7:21PM in Mortgages & endowments 8 replies 871 views

IAMIAM

Their two year tracker is now identical to their two year fix with 5 year fixes approaching 0.5% cheaper than the equivalent 2 year fix....

What can consumers read into here? Abandon trackers and move to a fix....or stick with tracker as rates are still to reduce further? 

If 5 year fixes are now going to match the BOE base rate....what does this mean.....?

Nailer99

5 year fixes are low because the banks are predicting interest rates will fall. 

Fixes are dropping in general due to intense competition between the banks. In the last few months, trackers were most popular, so competition drove the price down, now attention is shifting to the fixed rates. 

I still don’t know when I would switch to a fixed, but if 5-year rates come down to 3.5% or so I’ll probably jump. 

IAMIAM

Nailer99 said:

5 year fixes are low because the banks are predicting interest rates will fall. 

Fixes are dropping in general due to intense competition between the banks. In the last few months, trackers were most popular, so competition drove the price down, now attention is shifting to the fixed rates. 

I still don’t know when I would switch to a fixed, but if 5-year rates come down to 3.5% or so I’ll probably jump. 

Will this be when the base rate drops again 

Nailer99

This could happen before then. It is competition which is driving down Fixed rates. The average Bank of England rate over the next 5 years could be a lot lower than 4%. That’s just a guess though. 

The banks have models they use to make these guesses and they use them to help set their rates.

lindos90

On a similar theme, if someone applied for a fixed rate mortgage, and the bank's rate dropped during the application, or later, say before contract are exchanged, do the banks honour their rate change, or is the rate fixed at whatever it was at the point of application?

dimbo61

Crystal  ball time.
Most buyers make the decision on what is available  at the time.
5 year fix gives long term security and if you overpay every month it gives you time to reduce your mortgage debt and hopefully  get down to the next LTV 
IE 95%,90%,85%,75%,60%

RelievedSheff

lindos90 said:

On a similar theme, if someone applied for a fixed rate mortgage, and the bank's rate dropped during the application, or later, say before contract are exchanged, do the banks honour their rate change, or is the rate fixed at whatever it was at the point of application?

They will usually let you switch the product.

We applied for our remortgage six months early to secure a rate. About a month before completion was due we switched to a lower rate that was available at the time. Halifax requested a further valuation of the house which came back higher and dropped us into a lower LTV bracket and we ended up with an even lower rate than expected which was a bonus.

oakwood123

lindos90 said:

On a similar theme, if someone applied for a fixed rate mortgage, and the bank's rate dropped during the application, or later, say before contract are exchanged, do the banks honour their rate change, or is the rate fixed at whatever it was at the point of application?

We had that happen to us with Nationwide, the same product dropped nearly 1%, we had the completion paperwork, they were just waiting for us to call and give our verbal consent to the funds being released when I noticed the new rate. They pulled the mortgage out of completion and let us move to the lower rate. They said as long as the money hadn't been released they could do it.

Sncjw

What has nationwide dropped from and too?