Wednesday, Sep 30, 2009

Most borrowers opting for variable rate mortgages

Telegraph: Sharp drop in borrowers choosing fixed-rate mortgages

The proportion of people opting for fixed-rate mortgages has halved during the past two months following increases in the cost of the deals, research has showed. Mortgage broker John Charcol said only 42pc of its customers took out a fixed-rate mortgage during August, down from 83pc in June and the lowest level since December last year. The majority of people instead opted for variable-rate deals.

Posted by wanderinman @ 12:50 AM (1030 views)
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5 Comments

1. jack c said...

Here is Abbey's latest update received this morning (draw your own conclusions)

Following the launch of our new Homebuyer Plus products last week, we are introducing a new 5.79%, 2 Year Fixed Rate at 80% LTV with a £995 fee to this range.

We are also launching the following new products:

5.79%, 2 Year Fixed Rate Homebuyer product, 80% LTV with a £995 fee
5.39%, 4 Year Fixed Rate Homebuyer product, 75% LTV with no fee
5.49%, 4 Year Fixed Rate Remortgage product, 75% LTV with no fee

We have reduced the rate on selected 2 Year Fixed Rate products, the new rate is:

4.53%, 2 Year Fixed Rate Core and Homebuyer products, 75% LTV with a £995 fee

Wednesday, September 30, 2009 09:55AM Report Comment
 

2. str 2007 said...

You'd know better than I Jack how these rates fair in the market.

I do know that you could get a 10 year fixed deal at 4.79% back in early 2005.

Back then was supposedly boom ime and round my area at least house prices are higher now than they were then.

Makes no sense to me whatsoever, unless of course people are signing upto far better deals than those offered by Abbey.

The one advertised above for example offers £200k for £367 per month, which is less than the 2.4% they claim but I have no idea of the size of the arrangement fee or deposit required for that one.

It's clearly an Interest Only deal, which I thought were being phased out, clearly not.

Wednesday, September 30, 2009 10:15AM Report Comment
 

3. jack c said...

str 2007 - I think the differential between the major lenders SVR and the Fixed Rates on offer (especially when you roll in the fees and early termination penalties) is simply too great - for example Halifax SVR currently 3.5%.

It won't come as any surprise to visitors to this site because we talk about it often enough but Joe Public however (generally speaking) thinks the rates are going to be aligned to the 0.5% Base rate.

Wednesday, September 30, 2009 10:40AM Report Comment
 

4. str 2007 said...

And do you see the banks reducing their margins once their balance sheets have been restored ?

Wednesday, September 30, 2009 11:10AM Report Comment
 

5. jack c said...

str 2007 - no I cant see it personally as they are under pressure margin wise elsewhere - for example they made very good money on rolling in payment protection insurance (PPI) as part of their unsecured personal loan offerings. They cant now offer PPI at point of sale and I'd imagine the take up rate to therefore drop off significantly. This is further compounded by this ruling "FSA forces firms to revisit rejected PPI claims" see www.mortgagestrategy.co.uk/cgi-bin/item.cgi?id=194192&d=403&h=401&f=402

I'm now away from the office for the rest of the day but will pick up on this thread tonight.

Wednesday, September 30, 2009 11:22AM Report Comment
 

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