Hey there! I’ve got the hottest scoop on mortgage loans for you today.
HSBC recently unveiled a new 1.99 per cent mortgage for interested and qualified home buyers and remotgagers.
Wait a minute! Before you start rushing off to the nearest HSBC you’ve got to know that there’s a catch to this deal. Before you can qualify for this too-good-to-pass-up loan, you have to pay up to 40 per cent deposit and a booking fee of £1,499!
Industry experts are so stunned with the announcement of this below 2 per cent mortgage rate, because HSBC is already offering mortgage at 2.19 per cent- a rate which, on its own, is already lower than most of their competitors.
Currently, rival banks offer mortgage rates ranging below 3 per cent only. Tesco Bank has a 5 year fixed rate mortgage at 2.59 per cent, with a much lower £195 fee and 25 percent deposit. First Direct offers a 10 year fixed rate mortgage at 2.89 per cent with a £950 fee and 35 percent minimum deposit.
So how did mortgage rates get this low and until when will this phenomenon last?
Some analysts say that mortgage rates are being driven down by fierce competition for quality borrowers and assumptions in the capital markets, and they also claim that this would help drag down interest rates for a while longer.
David Hollingworth, of broker London and Country, said in an interview that other banks would definitely try to beat HSBC’s offer and it would lead to more mortgages with even lower rates for the next few months. So in his opinion, buyers should try to wait a while longer to apply for first time buyer mortgages.
On the other hand, Adrian Anderson, of broker Anderson Harrison, encourages people to grab a mortgage now! He claims that these rates are already so low, it would take a long time before banks could even come up with lower mortgage rate packages!
He added that buyers should be too greedy and take advantage of the opportunity handed to them by the lenders right now.
Fixed rate mortgages are a godsend for first time home buyers and young families, simply because they help protect these buyers from any interest rate increase. If the feared rate increase would be implemented, the higher fees may be too much to handle for buyers who still haven’t got stable financing on their own.
However, one thing that puts me off with HSBC’s new offer is the extremely high deposit fee needed to qualify. Let’s face it. Not everyone has that kind of cash laying around their house or their bank accounts, and saving that amount would years! Who would be able to qualify for this loan now?
Anyway, if you really can’t wait to buy a house but you can’t qualify for these new mortgage offerings, why not assume the existing financing of the house? There are a lot of old mortgages out there, and I bet their owners are more than wiling to let them go anytime. Try considering this alternative, the next time the bank rejects mortgage aplication. This might acutally save you a a lot of heartache and headaches in the process.