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  • FIRST POST
    • MSE Guy
    • By MSE Guy 2nd Sep 09, 1:01 PM
    • 1,628Posts
    • 1,255Thanks
    MSE Guy
    MSE News: The HSBC 1.99% mortgage: is it any good?
    • #1
    • 2nd Sep 09, 1:01 PM
    MSE News: The HSBC 1.99% mortgage: is it any good? 2nd Sep 09 at 1:01 PM
    This is the discussion thread for the following MSE news story:

    "HSBC has launched a variable rate mortgage at 1.99% the bank's lowest ever rate.

    However tempting it may seem, experts suggest you look beyond the attractive headline figure as the devil lies in the detail, though it may still be a good deal ..."


Page 1
    • Aegis
    • By Aegis 2nd Sep 09, 5:47 PM
    • 5,065 Posts
    • 3,411 Thanks
    Aegis
    • #2
    • 2nd Sep 09, 5:47 PM
    • #2
    • 2nd Sep 09, 5:47 PM
    It's probably worth mentioning that this variable rate mortgage is not like other variable rates with HSBC. Because it is a discount rather than a tracker rate, the mortgage will have an early repayment charge of 1% for each year of discount outstanding (adjusted pro rata for incomplete years), making getting out of the rate potentially very expensive compared to the standard tracker products offered by HSBC but without the guarantees of a fixed rate.

    It might still work out well if the base rate stays low and the SVR doesn't rise faster than the base rate. Whether this is worth a gamble probably depends largely on how much leeway there is in the affordability of the mortgage.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • michaels
    • By michaels 3rd Sep 09, 2:09 PM
    • 22,401 Posts
    • 103,135 Thanks
    michaels
    • #3
    • 3rd Sep 09, 2:09 PM
    • #3
    • 3rd Sep 09, 2:09 PM
    I paid the thieving sc um at hsbc 2k to get on a special discount rate 18 months ago - it was a 'special offer'. I would have taken a tracker but HSBC made a big thing about how they had 'the most competitive svr of the big banks' and that it had not been more than 125 basis points above BoE base for about 10 years. What a sucker I was. HSBC abandoned their competitive position using losses on their disastrous US purchase as a smokescreen for screwing over their UK customers and over the 2 years of the deal I will end up paying a lot more than people who chose their standard tracker product which was not correctly priced for risk even tho I still have more than 40% equity in my house. Compare this to LloydsTSB and Nationwide who have stuck to their commitment not to increase their svr to more than 2% over base...Just to add that for a highly rate bank like HSBC their cost of funds will be close to Libor - of late libor has tightened to the extent that the spread over base rate is very similar to what it was when I took out y mortgage so the 2.2% increase in the spread between their svr and bank base rate all reflects increased profit.

    The maths on this one is that 1199 on a 200k loan over 2 years adds about 0.3% pa to the effective rate making it about 2.29% compared to 2.55 (including 249 fee) for their 2.49% svr discount product but the later only requires 25% deposit.

    Both are good money for HSBC - given their excellent credit rating they can look to fund at libor which is currently only about 0.7% (3 month) and with the huge equity requirement they are hardly at risk of losses on the event of borrowers defaulting so basically money for old rope.
    Last edited by michaels; 03-09-2009 at 8:41 PM.
    Cool heads and compromise
  • ultramagnetic_commuter
    • #4
    • 3rd Sep 09, 3:35 PM
    • #4
    • 3rd Sep 09, 3:35 PM
    Indeed. This isn't a good deal.

    It's got a massive fee for such a short term and it's linked to the lenders SVR (not BOE).

    When rates go up 0.5% wait and see if that SVR goes up by 1%...

    It's a headline grabber, nothing else.
    • aah
    • By aah 4th Sep 09, 8:50 PM
    • 519 Posts
    • 213 Thanks
    aah
    • #5
    • 4th Sep 09, 8:50 PM
    • #5
    • 4th Sep 09, 8:50 PM
    I have two tracker mortgages with HSBC both taken out in 2008. One is for 1.25% and the other for 1.44%. Both deals are for the entire term of the mortgage (18 and 10 years) and the first one had no fee; the second 799.

    We have 60% equity in both properties, both of which were purchased for our own residential purposes.

    Compared to these mortgages, this deal is not so great, unless the LTV is quite high.
    • yelf
    • By yelf 4th Sep 09, 9:46 PM
    • 841 Posts
    • 236 Thanks
    yelf
    • #6
    • 4th Sep 09, 9:46 PM
    • #6
    • 4th Sep 09, 9:46 PM
    why does this even deserve a special mention? its a headline grabbing deal, which is no where as good as it seems. hardly revolutionary. Yet again NSRE is way off the mark.

    ps: had to laugh at how mis-informed and confused Martin was on BBC2 today.
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