Posts with tag: five-year fixed-rate mortgage

Record Low Mortgage Rates Disappear

Published On: May 20, 2015 at 9:46 am


Categories: Finance News

Tags: ,,

Those buying a home with a mortgage have run out of time to take advantage of the lowest ever long-term fixed rates.

Mortgage lenders have started taking their cheapest deals off the market, driving the best rates on a five-year fix over 2% again. The lowest five-year fixed rate mortgage is now 2.14%, up from 1.99%.

Lenders have been competing recently for the best offers on fixed rates. HSBC introduced a record low five-year fix of 1.99% in April, but this has since disappeared.

Woolwich also launched the same rate for a limited time last week, but this expired today.

Record Low Mortgage Rates Disappear

Record Low Mortgage Rates Disappear

These deals have been pulled due to the cost of funding on the wholesale markets – known as swap rates – increasing recently. Lenders use these rates to price their mortgages and they have a huge impact on the cost of lenders’ fixed rate mortgage funding.

In the middle of April, swap rates dropped to 1.46%, but reached 1.73% last week before declining again to 1.66%.

Swap rates are climbing after the bond markets became chaotic. Yields on UK Government bonds, called gilts, have been driven up.

Lenders will also bear in mind that the Bank of England’s (BoE) latest inflation report claims interest rates will increase in mid-2016.

The best rates

After Woolwich pulled its 1.99% five-year fix today, Chelsea Building Society now has the best deal, a 2.14% rate with a 40% deposit and £1,675 fee. A 25-year £150,000 mortgage on this would cost £646 per month and £40,438 over the five years.

If borrowers are looking for smaller fees, Yorkshire Building Society offers a 2.19% rate with a £975 fee. On the same mortgage, this would be £649 a month, but £479 cheaper over the five years at £39,959.

Yorkshire Building Society has also released a range of fee-free mortgages this week, with £1,000 cashback. Borrowers could get a five-year fix at 2.54% costing £675 per month on the average home loan and £40,557 over the term.

This deal becomes cheaper than the others when considering the cashback, which takes the overall cost down to £39,557.

For borrowers with smaller deposits, Post Office Money has a five-year fixed rate at 2.49% with a £999 fee and 25% deposit. A 25-year £150,000 mortgage would be £672 a month and £41,329 over five years.

Leek United offer a 3.59% rate for a £495 fee and 10% deposit. This would cost £758 per month on the same mortgage and £45,986 for five years.

The Help to Buy mortgage guarantee scheme provides a five-year fix from Post Office Money at 4.89% with no fee. The same mortgage would cost £867 a month and £52,037 over five years.





HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

Published On: April 20, 2015 at 10:01 am


Categories: Finance News

Tags: ,,,

HSBC could cause a price war in the mortgage market after launching a five-year fixed-rate deal at 1.99%.

This latest offering is the first ever home loan of this type with an interest rate less than 2%. However, borrowers will need a 40% deposit.

From today, HSBC will be introducing the 1.99% rate five-year fix. This is the lowest ever rate on a mortgage of this length. If buyers wish to benefit from this offer, they will need to raise a deposit of 40% of the property’s purchase price, or have equivalent equity in their home. The loan also has a £1,499 fee.

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

David Hollingworth, from mortgage brokers London & Country, says: “HSBC has broken quite a significant boundary by launching a rate below 2%. It looks exceptional value and shows just how hard lenders are prepared to fight for new business.”1

HSBC already offers the lowest rate in the five-year fixed-rate market, at 2.19%. The new rate will replace this and cost £15 a month less on a £150,000 25-year loan.

The bank will put other lenders under pressure to cut their rates to compete. The next cheapest deal is 2.24% from the Co-op.

Mortgage specialist at Middleton Finance, Daniel Bailey, notes: “The five-year deals have been hotting up for some time and I think this will push other lenders to respond, which is good news for borrowers.”

Although, experts believe that HSBC are more likely than other providers to turn down applications, causing aspiring buyers to miss out on the offer.

Bailey says: “I’ve had a lot of clients unable to get HSBC deals. One was recently turned down because HSBC could not see evidence of their weekly grocery spend on their current account statement. That’s because the borrower always paid their Tesco bill using their credit card, but the bank turned them down anyway.”1

Mortgage broker Coreco’s Andrew Montlake explains: “The headline rate is extraordinary, but there will be lot of people who won’t get this as HSBC is not the easiest lender to get through.”

Nationwide, Halifax, Lloyds Bank and Tesco all cut their rates on a number of different loans last week. However, rates rose last month for a short period.

Montlake says: “While rate cuts are welcome, the problem is that they still only benefit the same people. There are thousands of people including the self-employed, contract workers and older borrowers who can no longer get a loan because mortgage lenders have tightened their criteria more than they need to. Those are the people who now need some good news.”1