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First Direct Launches 'cheapest' Tracker Mortgage

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http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8220697/CBI-interest-rate-forecast-the-best-mortgage-deals.html

First Direct is hoping to lure borrowrs on rival lenders' standard variable rate (SVR) mortgages with a tracker mortgage at 1.49pc above base rate (current pay rate 1.99pc) for two years.

There’s a £999 booking fee, with the option to reduce the fee to just £99 on agreeing to pay 1.69pc above base rate for the first 2 years. First direct will cover the normal costs such as a standard valuation, the legal costs associated with re-mortgaging and the enquiry fee charged by their existing lender.

However, the loan is targetted at homeowners with plenty of equity built up in their home. And the prospects of a rate rise will lead many borrowers to opt for the security of a fixed rate mortgage. Here are the best deals:

Santander 2.65pc two-year fix. Up to 60pc LTV with £1,995 fee (LTV = loan to value; 60pc LTV means 40pc deposit)

Hanley Economic Building Society 2.85pc two-year fix. Up to 75pc LTV with £449 fee

Yorkshire Building Society 5.29pc two-year fix up to 90pc LTV. £495 fee

First Direct 3.89pc five-year fix. Up to 65pc LTV with £99 fee

Skipton Building Society 5.78pc five-year fix. Up to 90pc LTV with £995 fee

Bargain.

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They must be expecting rates to shoot up faster than a junky with 50 quid in his back pocket.

Really? If that's the case then why are they offering a market-leading 5 year fix well under 4% ?

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What does it revert to after two years.

Ain't worth it these days unless you can get that kind of rate or close to it as a life time tracker.

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What does it revert to after two years.

Ain't worth it these days unless you can get that kind of rate or close to it as a life time tracker.

Here is a list of current Standard variable rates for comparison (this data was accurate as of 16 July 2010)

Provider Standard Variable Rate (SVR)

RBS 4.00%

Nationwide 2.5% or 3.99%

Halifax 3.5%

Santander 4.24%

HSBC 3.94%

Barclays 2.99%

Leeds Building Society 5.69%

Natwest 4.00%

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During the financial year 09-10 I had some of my savings in a First Direct ISA bond. When it matured, FD was still offering a pretty good rate compared to the others on offer, and so I just wanted to roll it over for another year. They wouldn't let me do it. In fact, the small print of the application for 10-11 specifically stated that they wouldn't accept ISA transfers in from another FD ISA account, meaning that there was no way I could put that money into the new ISA bond without losing the tax-free status of all except £5k of it. So it went to Aldermore instead.

I don't understand this. Is there some FSA rule or other stating that banks can't let you roll over ISA savings from one fixed-rate, fixed-term bond to another? Or were FD operating this bond as a loss leader and thus trying to minimise their losses? I can't work out why they were actively trying to get me to take my money somewhere else.

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What does it revert to after two years.

Ain't worth it these days unless you can get that kind of rate or close to it as a life time tracker.

http://www.mortgagerates.org.uk/lenders/first-direct-svr.html

Once your mortgage has come to the end of its deal period you'll be placed onto the current standard variable rate (SVR) as a First Direct customer. There are no products that you can apply for just on SVR as even the tracker mortgages track the Bank of England base rate rather than the First Direct mortgage rate.

Current First Direct SVR

The current standard variable rate for First Direct Mortgages is 3.69% which is is slightly higher than the industry average and 3.5% above the BOE base rate.

Choosing a First Direct Mortgage and SVR

Although the lead rate from a First Direct mortage deal may look low it's actually the standard variable rate or SVR that's charged once your 2 or 3 year offer has completed which is probably the most important number to look at these days.

Not sure about the maths here isn't the BoE base rate 0.5%? Add 3.5% and that equals 4%. Or have banks got access to some sort of special rate from the BoE that we don't know about?

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During the financial year 09-10 I had some of my savings in a First Direct ISA bond. When it matured, FD was still offering a pretty good rate compared to the others on offer, and so I just wanted to roll it over for another year. They wouldn't let me do it. In fact, the small print of the application for 10-11 specifically stated that they wouldn't accept ISA transfers in from another FD ISA account, meaning that there was no way I could put that money into the new ISA bond without losing the tax-free status of all except £5k of it. So it went to Aldermore instead.

I don't understand this. Is there some FSA rule or other stating that banks can't let you roll over ISA savings from one fixed-rate, fixed-term bond to another? Or were FD operating this bond as a loss leader and thus trying to minimise their losses? I can't work out why they were actively trying to get me to take my money somewhere else.

I'm sure I've rolled ISA's over with the same institution several times over the years.

Edited by juvenal

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Really? If that's the case then why are they offering a market-leading 5 year fix well under 4% ?

+1

have reserved this rate for 6 months (although may not be able to buy by then), with 65% LTV it is 3.89%, not bad for 5 years...

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I'm at my folks for Christmas and I have just found out that my sister is coming off a 2year fix and about to go onto one of these HSBC/First Direct 1.79% above base mortgages. I said sounds great but what happens when the base rate hits 5%

She struck me down saying rates will never rise as it will put millions into negative equity. She owes circa £300k on a house in SE15.

Compelling argument I say.

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I'm at my folks for Christmas and I have just found out that my sister is coming off a 2year fix and about to go onto one of these HSBC/First Direct 1.79% above base mortgages. I said sounds great but what happens when the base rate hits 5%

She struck me down saying rates will never rise as it will put millions into negative equity. She owes circa £300k on a house in SE15.

Compelling argument I say.

That deal is available on 60% LTV so that house is 'worth' circle £500k I suppose.

I think she is right - the longer this goes on, more people will hold this believe and it will be impossible for Santa Mervyn King to raise rate.

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That deal is available on 60% LTV so that house is 'worth' circle £500k I suppose.

I think she is right - the longer this goes on, more people will hold this believe and it will be impossible for Santa Mervyn King to raise rate.

That will be it.

The bank originally put in a database value of £295k which meant they would have been unable to get the loan so they had to fork out money for a further more detailed valuation that came back at £495k I guess they hadn't spotted the twigs in vases first time around.

Seriously though, I feel that the governments plans are to inflate ourselves out of the debt and when I complete on the purchase of a property in the coming weeks my status will publically revert to Bull and I'll be talking merrily at parties re. how much money my home has made me on nth week. ps I am only buying as the house I'm buying is in a village with a very good primary school (ofstead: outstanding) and it will save us on the school fees we had expected for one child (soon to be two, oops!). I reckon I'm over paying by around £20k as I reasonably expect falls next year of at least 10%

Edited by tomposh101

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I'm at my folks for Christmas and I have just found out that my sister is coming off a 2year fix and about to go onto one of these HSBC/First Direct 1.79% above base mortgages. I said sounds great but what happens when the base rate hits 5%

And are they going to hit 5% any time soon? Anything is possible but the markets seems not to think so-have you seen what 5 yr swap rates are?

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Seriously though, I feel that the governments plans are to inflate ourselves out of the debt and when I complete on the purchase of a property in the coming weeks my status will publically revert to Bull and I'll be talking merrily at parties re. how much money my home has made me on nth week. ps I am only buying as the house I'm buying is in a village with a very good primary school (ofstead: outstanding) and it will save us on the school fees we had expected for one child (soon to be two, oops!). I reckon I'm over paying by around £20k as I reasonably expect falls next year of at least 10%

. I said sounds great but what happens when the base rate hits 5%

Congratulation for your second one.

Well, when the interest rate hits 2%, there will be severe pain and Santa Mervyn will drop that back to 0.5%, and opps..that still don't work, so that goes straight back to 0.1%...

Think tracker is brilliant..

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Blimey. Our mortgage that we gave up when we STR'd in 2008 was base rate + 0.17%. With Woolwich, no fee and with offset savings.

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That deal is available on 60% LTV so that house is 'worth' circle £500k I suppose.

I think she is right - the longer this goes on, more people will hold this believe and it will be impossible for Santa Mervyn King to raise rate.

Re-mortgage volumes would resume their fall, and mortgages for house purchase would stay low. There wouldn't be much business to go around!

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Re-mortgage volumes would resume their fall, and mortgages for house purchase would stay low. There wouldn't be much business to go around!

Just round the shop and see Petrol prices heading towards £1.30 (and when it comes on Jan 4th, that will be over £1.30), I think the era where people

spend 50% of their income on housing will be over. People used to spend around 50% on food and essentials as inflation will raged on.

Those on 0.17% above base (i.e. 0.67%) loans are having good fun and the length the state (BoE is an arm of the government) to favour one group over the other

is shocking.

Nominal house prices will probably hang on and will be characterised by exactly the situation you described, low volume and with no HP growth.

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Blimey. Our mortgage that we gave up when we STR'd in 2008 was base rate + 0.17%. With Woolwich, no fee and with offset savings.

Just wondered how the STR has worked for you do you think you would have been better keeping the house?I've got a mortgage at the same rate as you had and I am glad I didn't STR.

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  • 309 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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