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Woolwich Offers Mortgage At 1.98pc

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http://www.telegraph.co.uk/finance/persona...-at-1.98pc.html

The group, which is part of Barclays, will offer a step tracker with a starting rate of 1.98pc for one year for people with a 40pc deposit.

It is also reducing rates on two of its fixed-rate loans, cutting the cost of a two-year deal for people with a 30pc deposit by 0.1 of a percentage point to 3.99pc, while the cost of its three-year fixed-rate loan is being cut by 0.4 of a percentage point to 4.49pc.

The move is a further sign that competition is slowly beginning to return to the mortgage market, after HSBC launched a new discount mortgage with a starting rate of 1.99pc earlier this month.

Woolwich's step tracker has a rate of 1.48 percentage points above the Bank of England base rate for the first year, giving a current rate of 1.98pc, after which it reverts to a lifetime rate of base rate plus 2.49 percentage points, giving a rate of 2.99pc if the base rate stays at 0.5pc.

Borrowers have to pay a £999 arrangement fee to take it out, and they face early redemption charges of 2pc of the balance repaid for the first three years. It is also only available to people borrowing at least £200,000.

Ray Boulger of John Charcol, the mortgage broker, said taken over three years the product had an average rate of 2.65pc, assuming the base rate did not rise, which was a "reasonable but not fantastic rate".

Not quite as you think with this offer, very misleading as you only get the low rate for the first 12 months. I wonder how many will assume they have the 1.98% for deal! As that is what the big promo sign will just highlight.

This is clearly a deal aimed at the all important first time buyer. They only need £80K deposit to qualify.

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http://www.telegraph.co.uk/finance/persona...-at-1.98pc.html

Not quite as you think with this offer, very misleading as you only get the low rate for the first 12 months. I wonder how many will assume they have the 1.98% for deal! As that is what the big promo sign will just highlight.

This is clearly a deal aimed at the all important first time buyer. They only need £80K deposit to qualify.

Cheltenham and Gloucester have an SVR of BOEBR +2% on their mortgages currently

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As its been reported a big IR is expected shortly, after 12 months rates will be considerably higher so you are trapped!!!

I wouldn't touch it, well I ain't buying in near future, not on a mortgage anyway.

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Liked this article yesterday about HSBC Are Mortgage Rates Going DownYet

Danny Lovey, managing director if Basildon-based The Mortgage Practitioner, adds:

“The 1.99% interest rate is for headlines and the Virgin Mary. If you are a good customer of HSBC then this product will more than likely be available but it's unlikely that you will get it by walking in off the street.â€

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Why are the deals still so stingy and a minefield of gotchas?

I'm just coming to end of SVR - 1.75%, currently 3.24%, at Principality.

With LIBOR at 0.6% and 90% equity I thought I'd walk into a deal at around 3% but I'm struggling to find anything at that level without a fee that claws most of the saving back. I can get a fee free tracker from the Abbey at 3.54%, but obviously it runs the risk of surging with rates. A fee free 4% fix would be OK.

Looked on Moneyfacts and a few lenders sites directly. Am I not looking in the right places?

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Why are the deals still so stingy and a minefield of gotchas?

I'm just coming to end of SVR - 1.75%, currently 3.24%, at Principality.

With LIBOR at 0.6% and 90% equity I thought I'd walk into a deal at around 3% but I'm struggling to find anything at that level without a fee that claws most of the saving back. I can get a fee free tracker from the Abbey at 3.54%, but obviously it runs the risk of surging with rates. A fee free 4% fix would be OK.

Looked on Moneyfacts and a few lenders sites directly. Am I not looking in the right places?

.... I think this tells you that the banks have a very good understanding of the directions in which house prices and interest rates are about to go (and the two directions are not the same....)

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£999 arrangement fee :o Why do people even consider accepting this?

Most mortgages have an arrangement fee, the good ones tend to be £800+. You just need to factor it into the rate properly.

Would you rather pay 4% or 3.69% with a £1,000 fee?

On a big mortgage like mine it's definitely going to be the 3.69%.

The fee allows them to charge people who haven't got cash sitting around (i.e. poorer people) a higher fee. It's a type of selection. It's actually rather clever.

(Of course most banks let you add the fee to the mortgage anyway so this doesn't really apply anymore).

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They only need £80K deposit to qualify.

£333,333 X 40% = £133,333

Which means £133,333 deposit to leave aminimum 200k mortgage.

figures (on £200K mortgage).

yr 1 - payments are £846.

yr 2 - payments are £947.

plus £1K fee - or about 0.5%.

great if rates are 0.5%.

What this deal tells me is that a) bank expect rates to rocket and B) the current wide margins to tighten a fair bit as competition (or government interference) hits the market and c) what price level Barclays think is the doomsday scenario.

If rates go back to 5% as quickly as they came down - feasibly within 12 months (they took a year to drop), then you could be paying 7.49% within 12 months on that £200K mortgage - £1,476 a month and be locking in at a point where it's not going to be cost effective for long to switch out of it. It's unlikely, but so was 0.5%. And I'd suggest it's far less unlikely than the falls all the way to 0.5% were.

you need big balls, total recklessness, stupidity or a very odd set of circumstances to buy into this one.

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Interest rates aren't going anywhere until AT LEAST after an election. They are still printing money to stop them putting rates DOWN FFS.

There is no one in control (who gives a damn).

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Interest rates aren't going anywhere until AT LEAST after an election. They are still printing money to stop them putting rates DOWN FFS.

There is no one in control (who gives a damn).

no, they are printing cash, same as cutting rates, to try to win an election. Nothing more, nothing less. We have to go through the pain, we have to have the public sector unrest, we have to have the benefits costs halved - none of this can happen with what we are doing, but without that cull of costs, we simply cannot have a sensible country. [none of them will do it - it's too politically inflammable]

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They only need £80K deposit to qualify.

£333,333 X 40% = £133,333

Which means £133,333 deposit to leave aminimum 200k mortgage.

Oops, clearly with my example they would only be needing a £120k mortgage.

Clearly not a mortgage aimed at the FTB my like the hugely indebted middle classes living in their dream 3 bed semi down south.

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Banks need to make lots of profits to replace all the money they lost.

The government promised us the banks would do this.

For some reason though, we didn't think they were planning to make the profits from us, we assumed it would be from someone else.

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