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Bruce Banner

1.99% Five Year Fixed Rate Mortgage

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wow, a mortgage thread.....havent had one of those for a while.

I read somewhere that the refusal rate for credit of all types is going through the roof.

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http://www.theguardian.com/money/2015/apr/18/hsbc-five-year-fixed-mortgage

But only with 40% deposit and £1,499 fee. Does this tell us anything?

Yep. If you already have lots of money (not so likely for the masses in modern Britain) or a house that's seen plenty of HPI in recent years (more likely in modern Britain) and you want to take on a LOT of debt to buy a bigger house because you're worth it (also likely in modern Britain) then providing you can keep your job for the next 5 years (statistics say likely, reality for many less likely) you'll be ok to service cheap debt for the next 5 years while at the same time make your valuable contribution to Forever UK HPI (copyright 2015).

In contrast (with a fair wind) I'll be debt free in a modest home in sunnier climes.

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wow, a mortgage thread.....havent had one of those for a while.

I read somewhere that the refusal rate for credit of all types is going through the roof.

According to BBC News this morning, the Financial Ombudsman has recently ruled that HSBC was wrong to refuse a mortgage to a man in his late 40s on the grounds that he would have been over 65 before it would have been paid off.

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What would be useful is some sort of calculator to work out the break even amount to borrow. For example say if you had £40k mortgage left at 4% would you save enough to cover the fee?

However for those buying a hugely expensive property this is effectively giving them money for free. Borrow at 1.9% + factor in the fee over the term to give you a magic number and HPI in some areas at 10% per annum. You can't fail to make money. Why would you not buy with offers like this it's win win. Providing you ignore the risk of house prices collapsing but so far that bubble seems impervious.

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Surely higher Bruce? In 5 years they should have reduced the outstanding?

Yes, but less than you might think, because monthly payments in the early years of a mortgage term are mostly interest.

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That, and they don't expect house prices to fall more than 40% in that time.

The smart money seems to be pricing in a 25% fall, but remember that's an average.

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Not really. It means HSBC can hedge their mortgage book.

I doubt they are planning on selling many; more of a cheap ad to get their mortgage offers in the papers and up the google ranking.

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HSBC recently gave us a decline in principle on their headline 1.99% telling us we failed to meet their lending criteria. The printed criteria were easily met. I'm quite relieved actually as it means we won't have a £225k mortgage and can clear the remaining balance on our present home which I'll get round to doing next week. My wife is less keen to buy again and now happy to rent our next family home while renting out our own home, it offers us flexibly over work and schools too. Win win.

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It tells me that HSBC don't expect rates to increase past 1.5% in the next 5 years.

At least.... prepare for a similar 10 year fixed rate...

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Recently requested a loan for a car I was going to buy from N.Ireland.

Could cover it in cash but would rather spread it out

Rejected because the asset I'm wanting to buy is located there. Despite stating it would be brought across immediately.

Ah well!

Won't bother buying then and save my pennies :D

Edited by Gerinako

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What would be useful is some sort of calculator to work out the break even amount to borrow. For example say if you had £40k mortgage left at 4% would you save enough to cover the fee?

However for those buying a hugely expensive property this is effectively giving them money for free. Borrow at 1.9% + factor in the fee over the term to give you a magic number and HPI in some areas at 10% per annum. You can't fail to make money. Why would you not buy with offers like this it's win win. Providing you ignore the risk of house prices collapsing but so far that bubble seems impervious.

https://www.drcalculator.com/mortgage/uk/

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HSBC have in my experience have the toughest requirements. The £1.5K fee also needs to be included eg. need to calculate a APR rate. I also would expect a hefty early repayment charge on that one but I doubt I would ever get past stage 1 HSBC.

This is not advice.

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Recently requested a loan for a car I was going to buy from N.Ireland.

Could cover it in cash but would rather spread it out

Rejected because the asset I'm wanting to buy is located there. Despite stating it would be brought across immediately.

Ah well!

Won't bother buying then and save my pennies :D

get an unsecured one then

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The BoE updated its database last week with average household interest rates for March.

Despite fixed mortgage rates being significantly lower than last year, the CML's release on the same day showed actual loans taken out in February for house purchase were 16% down year-on-year for both FTBs and home movers.

BTL on the other hand saw a small year-on-year increase in house purchase loan volumes.

MortRates0315.gif

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The BoE updated its database last week with average household interest rates for March.

...

SVRs still not showing any interest (no pun intended) in falling towards the present low fixes. Colossal gap between the SVRs and the quoted rates on the fixes, (probably less if fees were considered).

I think that is my 3rd favourite house prices obsession related graph. First place to sec lending/GDP (especially if nominal vs nominal, obviously...), second place to total outstanding secured lending. All tell same story - extent of return to normal post-2008 has been somewhat exaggerated.

Edited by bland unsight

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I saw this on the mail front page, as soon as I saw it I thought the pyramid scheme must be close to collapse and then involved are desperate to keep it going.

something must be about to give way

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Yes, but less than you might think, because monthly payments in the early years of a mortgage term are mostly interest.

not at this level of interst it isnt. Less than half to start with.

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