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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 19th Oct 12, 12:31 PM
    • 2,324Posts
    • 971Thanks
    Former MSE Helen
    MSE News: Mortgages tumble below 2%... if you've got the deposit
    • #1
    • 19th Oct 12, 12:31 PM
    MSE News: Mortgages tumble below 2%... if you've got the deposit 19th Oct 12 at 12:31 PM
    "Tesco Bank has today launched a two-year fix at 1.99% while First Direct has launched a five-year fix at 2.99% ..."

Page 1
    • Consumerist
    • By Consumerist 19th Oct 12, 1:54 PM
    • 5,247 Posts
    • 2,630 Thanks
    Consumerist
    • #2
    • 19th Oct 12, 1:54 PM
    • #2
    • 19th Oct 12, 1:54 PM
    With a 40% deposit and nearly £1,000 fee, this is hardly designed to attract first-time buyers. It will, however, help the rich get richer.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • SamDude
    • By SamDude 19th Oct 12, 2:11 PM
    • 240 Posts
    • 75 Thanks
    SamDude
    • #3
    • 19th Oct 12, 2:11 PM
    • #3
    • 19th Oct 12, 2:11 PM
    With a 40% deposit and nearly £1,000 fee, this is hardly designed to attract first-time buyers. It will, however, help the rich get richer.
    Originally posted by Consumerist
    So if you're not poor or a first-time buyer, that makes you 'rich getting richer'??

    In a way, I suppose you're right. Anything that saves you money, makes you richer.
    • somethingcorporate
    • By somethingcorporate 19th Oct 12, 3:51 PM
    • 9,119 Posts
    • 8,806 Thanks
    somethingcorporate
    • #4
    • 19th Oct 12, 3:51 PM
    • #4
    • 19th Oct 12, 3:51 PM
    With a 40% deposit and nearly £1,000 fee, this is hardly designed to attract first-time buyers. It will, however, help the rich get richer.
    Originally posted by Consumerist
    It's offering the best rates to those with the lowest risk.

    It's been this way since time began for mortgages and loans so hardly a new ploy.

    Great rates, wish I was not stuck on a long term fix at 4%+!
    Thinking critically since 1996....
    • Consumerist
    • By Consumerist 19th Oct 12, 4:10 PM
    • 5,247 Posts
    • 2,630 Thanks
    Consumerist
    • #5
    • 19th Oct 12, 4:10 PM
    • #5
    • 19th Oct 12, 4:10 PM
    It's offering the best rates to those with the lowest risk. It's been this way since time began for mortgages and loans so hardly a new ploy.
    Originally posted by somethingcorporate
    But with the government taking the risk in this case, the offer is designed to help the rich get richer and the bank get fatter. I fail to see how it helps first-time buyers unless they are rich enough to stump up the deposit and find an additional £1,000.

    No-one, of course, expected the banks to behave any differently - except our public-school government.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • mrginge
    • By mrginge 19th Oct 12, 5:52 PM
    • 4,696 Posts
    • 8,939 Thanks
    mrginge
    • #6
    • 19th Oct 12, 5:52 PM
    • #6
    • 19th Oct 12, 5:52 PM
    I wasn't aware that every mortage product on the market had to be aimed at first time buyers.
    • somethingcorporate
    • By somethingcorporate 19th Oct 12, 6:28 PM
    • 9,119 Posts
    • 8,806 Thanks
    somethingcorporate
    • #7
    • 19th Oct 12, 6:28 PM
    • #7
    • 19th Oct 12, 6:28 PM
    Where does it say it is for FTB? I think you will find the most sensible FTBs are saving like mad to get decent deposits so they can access the best rates.

    Stumping up a deposit doesn't make you rich, just sensible and disciplined with money. These are two vastly different things which I am guessing you do not appreciate.
    Thinking critically since 1996....
    • Consumerist
    • By Consumerist 19th Oct 12, 6:33 PM
    • 5,247 Posts
    • 2,630 Thanks
    Consumerist
    • #8
    • 19th Oct 12, 6:33 PM
    • #8
    • 19th Oct 12, 6:33 PM
    Stumping up a deposit doesn't make you rich, just sensible and disciplined with money. These are two vastly different things which I am guessing you do not appreciate.
    Originally posted by somethingcorporate
    But you have to be relatively rich to even save anything these days but I don't need to guess that you really don't appreciate that.

    Oh how the well off do cluck. Bless.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • SG27
    • By SG27 19th Oct 12, 7:10 PM
    • 2,731 Posts
    • 1,926 Thanks
    SG27
    • #9
    • 19th Oct 12, 7:10 PM
    • #9
    • 19th Oct 12, 7:10 PM
    Where does it say it is for FTB? I think you will find the most sensible FTBs are saving like mad to get decent deposits so they can access the best rates.

    Stumping up a deposit doesn't make you rich, just sensible and disciplined with money. These are two vastly different things which I am guessing you do not appreciate.
    Originally posted by somethingcorporate
    I agree just read the saving for a deposit thread.
    • Johnmcl7
    • By Johnmcl7 19th Oct 12, 9:07 PM
    • 2,592 Posts
    • 1,728 Thanks
    Johnmcl7
    This may be a stupid question but I'm going to ask it anyway as it's something I've wondered about, how much do the fees affect how good the deal is? As in, how low does the percentage have to go to be worth spending more on the fees as the article mentions thousands in fees.

    I am a first time buyer and I've saved up a large deposit as any time I've been researching mortgages it seemed the way to go to get the best rates and ultimately save a fairly significant chunk of money in the long run, it does mean cutting back on my outgoings rather than being rich (unfortunately!). I can't quite get my head round paying a largish fee for just a couple of years fixed rate.

    John
    • mrBlue
    • By mrBlue 19th Oct 12, 9:15 PM
    • 31 Posts
    • 12 Thanks
    mrBlue
    And Who's paying for this fantastic below-inflation mortgage rate?
    Yep, You've got it! Six months ago, savings account interest rates were 3.2% or 3.3% for the best deals. Today, they're 2.8% if you're lucky. The truth is that the banks are creaming it, the Bank of England is doing its best to destroy the pensions and savings of the people who fund it, and the government is totally inept and incapable of understanding the effects of its own actions. What a country to live in!

    Yet again, it is time for a co-ordinated mass withdrawal of money from savings accounts from one of the big banks. The number of £50K+ accounts is such that a co-ordinated withdrawal of £30Kat 2pm on a Friday afternoon into £20 notes could bring down any one of the banks in the UK, and cause overnight money market rates to spike to 10%. Time to teach these idiots a lesson.
    • Pincher
    • By Pincher 20th Oct 12, 2:30 AM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    Funding for Lending is finally filtering through, but god knows how much is side tracked into propping up capital reserves first.
    The whole process is about re-inflating the property bubble through cheap money, using a LEAKY HOSE!

    1. Stop diluting my money by printing more money.

    2. The banks are lending the money we give them at 5% to First Time Buyers.

    3. The £2,499 type arrangement fees means "Don't buy this product, dumb dumb. We would rather lend at 5% to FTBs."

    It's like charities these days. The "charity workers" are simply employees paid a salary, sometimes on commission. Directors get salaries of £100k or so. The aid gets through by bribing local militias and warlords. Fiinally, after you distribute the aid, gunmen come and shoot the starving and take it away to feed the war effort.

    Just guarantee the loans for FTBs, so they can get low rates, which will stop the profiteering.
    • SG27
    • By SG27 20th Oct 12, 5:42 AM
    • 2,731 Posts
    • 1,926 Thanks
    SG27
    This may be a stupid question but I'm going to ask it anyway as it's something I've wondered about, how much do the fees affect how good the deal is? As in, how low does the percentage have to go to be worth spending more on the fees as the article mentions thousands in fees.

    I am a first time buyer and I've saved up a large deposit as any time I've been researching mortgages it seemed the way to go to get the best rates and ultimately save a fairly significant chunk of money in the long run, it does mean cutting back on my outgoings rather than being rich (unfortunately!). I can't quite get my head round paying a largish fee for just a couple of years fixed rate.

    John
    Originally posted by Johnmcl7

    I work out the over all cost of the mortgage over the deal period. So if you have a 5 year fix at 2.99% and it's going to cost £474 per month but the fee is £1995 then multiply £474 by 60 and add the £1995 to get the overall cost. Do the same with higher rates and smaller fees to compare. In this case paying a higher rate with a lower fee works out cheaper.
  • really??
    Sorry, what is "rich"?? I am an FTB, 39 yo, finally on a good salary with small amount of savings, no debt, but likewise no credit, and yet I have been refused anything more than a 65% mortgage. With average property prices within a 50 mile radius of where I live (currently having to pay >£1k per mth in rent on a fairly crummy flat) being at least £150k (and too small for my family anyway) that means this 'apparently rich' person has to stump up over £50k in just a deposit.

    Who has that kind of earning-to-saving power these days???

    I object to the blanket response that earning over a certain level, which incidentally means I can't participate in something like first buy makes a person 'rich'. The simple fact is I can't afford to buy and never will, no matter that I now earn a good salary. It isn't just low earners that suffer!
    • ijrwe
    • By ijrwe 20th Oct 12, 9:24 AM
    • 428 Posts
    • 77 Thanks
    ijrwe
    I'm a FTB with 55% deposit....

    it's just a really cheap house!
  • QBSBuck
    Sorry, what is "rich"?? I am an FTB, 39 yo, finally on a good salary with small amount of savings, no debt, but likewise no credit, and yet I have been refused anything more than a 65% mortgage. With average property prices within a 50 mile radius of where I live (currently having to pay >£1k per mth in rent on a fairly crummy flat) being at least £150k (and too small for my family anyway) that means this 'apparently rich' person has to stump up over £50k in just a deposit.

    Who has that kind of earning-to-saving power these days???

    I object to the blanket response that earning over a certain level, which incidentally means I can't participate in something like first buy makes a person 'rich'. The simple fact is I can't afford to buy and never will, no matter that I now earn a good salary. It isn't just low earners that suffer!
    Originally posted by really??
    I hear you. Its a really tough position to be in. Wow where do you live? £700 would get you a 3 bed semi to rent around here.
    • Consumerist
    • By Consumerist 20th Oct 12, 11:05 AM
    • 5,247 Posts
    • 2,630 Thanks
    Consumerist
    I work out the over all cost of the mortgage over the deal period. So if you have a 5 year fix at 2.99% and it's going to cost £474 per month but the fee is £1995 then multiply £474 by 60 and add the £1995 to get the overall cost. Do the same with higher rates and smaller fees to compare. In this case paying a higher rate with a lower fee works out cheaper.
    Originally posted by SG27
    I modify that slightly by considering the overall cost of finance for the period of the deal..

    So, if you borrow £100,000 for 2 years fixed at 2% pa with a £1,000 fee, the interest charge is approx. £100,000 x 2% x 2 years = £4,000 + £1,000 fee = £5,000 total cost of finance over the two year period. This method takes into account the capital paid off the mortgage during the two-year period.

    It's difficult to compare deals over different periods because you don't know in advance what new deal you might get when the earlier one expires. Hope that makes sense.
    Last edited by Consumerist; 20-10-2012 at 11:08 AM.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • SG27
    • By SG27 20th Oct 12, 11:18 AM
    • 2,731 Posts
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    SG27
    I modify that slightly by considering the overall cost of finance for the period of the deal..

    So, if you borrow £100,000 for 2 years fixed at 2% pa with a £1,000 fee, the interest charge is approx. £100,000 x 2% x 2 years = £4,000 + £1,000 fee = £5,000 total cost of finance over the two year period. This method takes into account the capital paid off the mortgage during the two-year period.

    It's difficult to compare deals over different periods because you don't know in advance what new deal you might get when the earlier one expires. Hope that makes sense.
    Originally posted by Consumerist


    Thats exactly the same as mine but a slightly different way of getting the same answer. You're right the fixed rate has to be the same length and it's assuming you can remortgage to another deal after the period ends. If someone has a low deposit I would take into account the SVR too as stricter lending criteria or falling house prices could mean your stuck on that SVR. Although SVRs can and do change!!
  • QBSBuck
    The calculated interest is compound not simple isn't it, and calculated on a daily basis? Are you just using that method as rough and ready indication?
    “Nobody ever defended anything successfully, there is only attack and attack and attack some more.”
    SAF...ok G. Patton

    "If a man does his best, what else is there?"
    G. Patton
    • Consumerist
    • By Consumerist 20th Oct 12, 11:33 AM
    • 5,247 Posts
    • 2,630 Thanks
    Consumerist
    The calculated interest is compound not simple isn't it, and calculated on a daily basis? Are you just using that method as rough and ready indication?
    Originally posted by QBSBuck
    Quite right. It's just a rough-and-ready method to make comparisons. Any accurate method becomes a little complex. Over the short periods of mortgage deals it should be close enough for practical purposes.
    Warning: In the kingdom of the blind, the one-eyed man is king.
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