Mortgage - Is 5.17% fixed over 5 years good?
Discussion
HSBC just called me up and offered the above rate as incentive to move my mortgage to them.
Am I right in thinking that when banks start to offer fixed rates over fairly long periods, its in an attempt to lock you in when there's a possible rate drop coming? Or am I just cynical? No-one called me to offer fixing when rates went up over the last couple of years.
Am I right in thinking that when banks start to offer fixed rates over fairly long periods, its in an attempt to lock you in when there's a possible rate drop coming? Or am I just cynical? No-one called me to offer fixing when rates went up over the last couple of years.
What's the cheapest tracker/discount etc rate you could get elsewhere? What's the difference between the two? You are paying a premium for the security of knowing exactly how much you will be paying every month for the next five years. Essentially you are taking a gamble that rates will rise more than the difference in the variable rate mortgage, whilst having the benefit of accurate budgeting. The bank are doing the same from the opposite side: Guaranteeing their income and hoping that their margins will improve (i.e. rates decrease).
Are you tied in for the whole five years?
Sorry there isn't a simple answer to your question as it all depends on your risk profile and your expectation of interest rate movements!
One thing I have found is that Joe Public can rarely get the best deal on this own and that a good IFA can get you a better deal, without it costing you anything.
(Disclaimer I'm not an IFA etc etc yada yada investments can take a bath as well as pay for your retirement complete with nubile virgins and fruit based cocktails)
Are you tied in for the whole five years?
Sorry there isn't a simple answer to your question as it all depends on your risk profile and your expectation of interest rate movements!
One thing I have found is that Joe Public can rarely get the best deal on this own and that a good IFA can get you a better deal, without it costing you anything.
(Disclaimer I'm not an IFA etc etc yada yada investments can take a bath as well as pay for your retirement complete with nubile virgins and fruit based cocktails)
eyebeebe said:
One thing I have found is that Joe Public can rarely get the best deal on this own and that a good IFA can get you a better deal, without it costing you anything.
I agree. And I know that the banks will have lots of analysts working on trends in order to safeguard the banks profits. Which is why I am dubious when they start offering fixed rates.
At the moment I have a tracker
.What fees are charged? Ive just had a quick look & woolwich are offering 4.98% 5 year fixed but with a £1,495 fee.
Fees free then C&G are looking good at 5.35% fixed for 5 years. free legals, no arrangement fee & no valuation fee.
Theres a heap of deals in between so it generally boils down to how much you want to borrow to wether its worth paying a fee or not. Also of course depends on loan to value, your income & your credit status.
(Oh & brokers wont normally deal with HSBC as they wont pay a proc fee.)
Fees free then C&G are looking good at 5.35% fixed for 5 years. free legals, no arrangement fee & no valuation fee.
Theres a heap of deals in between so it generally boils down to how much you want to borrow to wether its worth paying a fee or not. Also of course depends on loan to value, your income & your credit status.
(Oh & brokers wont normally deal with HSBC as they wont pay a proc fee.)
cy88 said:
splodge s4 said:
What fees are charged?
HSBC are saying no fees at all.
Not a bad deal then! My only real gripe about HSBC (apart from not paying brokers) is they will really try & make you take all their insurances & they arnt cheap. They wont make money on the mortgage so they will go all out to make it some other way. Its not compulsary, however it will be laid down to make it sound like they wont give you the mortgage unless you take their life, critical illness & accident & sickness cover.
Your insurances are alot cheaper elsewhere. See what they say....
splodge s4 said:
cy88 said:
splodge s4 said:
What fees are charged?
HSBC are saying no fees at all.
Not a bad deal then! My only real gripe about HSBC (apart from not paying brokers) is they will really try & make you take all their insurances & they arnt cheap. They wont make money on the mortgage so they will go all out to make it some other way. Its not compulsary, however it will be laid down to make it sound like they wont give you the mortgage unless you take their life, critical illness & accident & sickness cover.
Your insurances are alot cheaper elsewhere. See what they say....
Am with HSBC for my mortgage (fixed since early 2005 at 5.29% for 5 years, FTB, 100% mortgage, so am happy with that) - and agree that they do want you to buy all their stuff, and despite telling me it was competitevely priced they were "ok" when I told them to stuf their own insurance as xyz companies could do it for half the price. They set up the over-payments with no fuss too (although frustrating that I can't organise these online on an ad-hoc basis, but hey ho, a quick call and a DD is set-up / stopped).
splodge s4 said:
cy88 said:
splodge s4 said:
What fees are charged?
HSBC are saying no fees at all.
Not a bad deal then! My only real gripe about HSBC (apart from not paying brokers) is they will really try & make you take all their insurances & they arnt cheap. They wont make money on the mortgage so they will go all out to make it some other way. Its not compulsary, however it will be laid down to make it sound like they wont give you the mortgage unless you take their life, critical illness & accident & sickness cover.
Your insurances are alot cheaper elsewhere. See what they say....
Don't think some lenders pay brokers fees as the brokers themselves tend to go to who pays more (and are also tied with who pays the most commission on the life they sell - only IMHO off course. Either go in house or go true IFA route.
splodge s4 said:
Not a bad deal then! My only real gripe about HSBC (apart from not paying brokers) is they will really try & make you take all their insurances & they arnt cheap. They wont make money on the mortgage so they will go all out to make it some other way. Its not compulsary, however it will be laid down to make it sound like they wont give you the mortgage unless you take their life, critical illness & accident & sickness cover.
Your insurances are alot cheaper elsewhere. See what they say....
Your insurances are alot cheaper elsewhere. See what they say....
Many banks are really just really insurance companies when it comes to retail finance. Bear in mind that banks are run by people, though, and people do make mistakes (and hence there can be deals):
- Egg accidentally launched a savings account and savings product with interest rates such that you could take out a loan and invest it back with them to make money
- HSBC and every other retail bank are reporting massive losses on their credit card book - even the big boys get risk scoring & profiling wrong.
You could end up with a great deal or you could end up with a lousy one from a fixed rate mortgage. On average, the bank hopes that they'll come out ahead (and the successful ones usually do!), but there will be times where individual customers win. But you're always betting that you know/guess better than their analysts...
[quote=J_S_G But you're always betting that you know/guess better than their analysts...
[/quote]
I always say its not worth trying to guess if rates are going up or down or whatever, you dont really know... focus on your own little world, if your income is pretty level & wont change much in the next few years then to have your mortgage payments level would suit you, forget what goes on out side your door, atleast you know what your doing for the next few years... If your stretching your income, say over 4x or whatever then again thats a good reason to fix.
[/quote] I always say its not worth trying to guess if rates are going up or down or whatever, you dont really know... focus on your own little world, if your income is pretty level & wont change much in the next few years then to have your mortgage payments level would suit you, forget what goes on out side your door, atleast you know what your doing for the next few years... If your stretching your income, say over 4x or whatever then again thats a good reason to fix.
AM04ARO said:
Don't think some lenders pay brokers fees as the brokers themselves tend to go to who pays more (and are also tied with who pays the most commission on the life they sell - only IMHO off course. Either go in house or go true IFA route.
Following Mortgage Day back in 2004, it should be theoretically impossible for a broker to choose YOUR mortgage on the amount THEY get paid. Brokers should also have to declare whether they are tied both for mortgage business and for insurances. Unfortunately instead of making a crystal clear distinction between a tied broker and a truly independent broker the issue was fudged by the use of the phrase "whole of market", and the regulators definition of independent.
A "whole of market" broker can actually have a pretty limited panel of lenders to choose from, but as long as that panel is wide enough to be representative of the whole market, then the FSA is not that bothered.
To be classed as truly independent a broker has to offer you the opportunity to pay a fee for the advice given. As a borker I offer that choice, as yet not one client has opted to pay me a fee on top of the commission I receive from the lender and receiving one does not preclude receiving the other)
Had this sort of thing been better set up then the mortgage broking industry would be getting somewhere in losing its dodgy image. As it stands the industry is still littered with "salespeople" who go on commission level rather than the best product for the client. It is truly impossible as well to differentiate between brokers due to their commission/ charging structure. Or by whether they are Estate agency based, or have separate companies. I know good and bad examples of all types.
I'm interested by what you mean by going in house?
I'm also interested to see what you mean by a true IFA?
scotal,
Call me cynical but I have seen people moved around from lender to lender so the 'IFA' gets a fee.
I have also seen so called IFA's pretty much selling one Insurers product (normally reviewable life so the premium undercuts the competition).
When I say in house I mean the Bank or Building Society where you get the mortgage, you should get a better overall service both short or long term but not always the cheapest deal on all products.
A true IFA really will have access to the whole market place rather than preferred suppliers (those that pay the most). Not saying all are the same just that with any industry you need to find a reputable one.
As for the original question 5.17% seems good at the moment, just depends how interest rates work out over 5 years.
Call me cynical but I have seen people moved around from lender to lender so the 'IFA' gets a fee.
I have also seen so called IFA's pretty much selling one Insurers product (normally reviewable life so the premium undercuts the competition).
When I say in house I mean the Bank or Building Society where you get the mortgage, you should get a better overall service both short or long term but not always the cheapest deal on all products.
A true IFA really will have access to the whole market place rather than preferred suppliers (those that pay the most). Not saying all are the same just that with any industry you need to find a reputable one.
As for the original question 5.17% seems good at the moment, just depends how interest rates work out over 5 years.
AM04ARO said:
scotal,
Call me cynical but I have seen people moved around from lender to lender so the 'IFA' gets a fee.
Call me cynical but I have seen people moved around from lender to lender so the 'IFA' gets a fee.
I don't doubt it. However if the broker can justify moving the loan on a true cost basis then all well and good, and since 2004, the broker must be able to justify the product offered. "cos I get paid, innit" is not suitable justification. I have recommended people stay with their lender at financial cost to me. At least one was a PH'er. Bear in mind that a growing number of lenders will now pay the broker a retention fee, if the client renews their deal the broker gets a fee.
AM04ARO said:
I have also seen so called IFA's pretty much selling one Insurers product (normally reviewable life so the premium undercuts the competition).
An IFA with a decent compliance department shouldn't get away with this. Ours takes an interest in every case, and if they feel you are over recommending a particular insurer, they will note it. As for reviewable versus guaranteed, unless the client takes the trouble to read what is put in front of them, and then ask, they will never find this out. If the broker is on his toes, the policy will have been churned (deliberate use of the word) before the review period kicks in. For anyone speaking to an IFA/Broker, check the Initial disclosure document they give you. This will tell you whether they are tied, whether they operate from a panel, or whether they have access to all product providers. Oh, if a broker/IFA etc doesnt offer you an IDD, or terms of business early on in your discussions, he is either mighty forgetful or in my opinion has something to hide, you may wish at that point to find another advisor.
AM04ARO said:
When I say in house I mean the Bank or Building Society where you get the mortgage, you should get a better overall service both short or long term but not always the cheapest deal on all products.
I only wish that were true. Banks and Building Socs offer in many cases shockingly poor levels of customer service. The people organising your products for you are working to targets, bonuses and commissions, the same as a broker. They certainly don't promote competition in the market place, and banks and build socs are always tied agents. They have one product to recommend, a decent broker should have the whole market.
AM04ARO said:
A true IFA really will have access to the whole market place rather than preferred suppliers (those that pay the most).
Unfortunatley thereare IFA''swho are just as used to sharp practise as there are mortgage brokers. Many IFA's are anything but independent, again being tied, or using restricted panels. they get away with it because they hide behind a veneer of respectability that Joe public thinks the word indpendent gives.
AM04ARO said:
Not saying all are the same just that with any industry you need to find a reputable one.
That's the tough bit though. Finding a reputable broker of any sort in financial services is tricky. Rather like a good mechanic or builder, word of mouth recommendation is the best way. IMHO The exams required to get into the idustry are way too easy, and the industry is set upon a course of sales volume above all else. I'd like to think I am a reputable broker. I'd really like to think that in 5 years time, financial services will have changed out of all recognition to become the industry/career it should be, but unfortunately, like you, I'm a cynic.
You obviously know your stuff, may I ask what you do?
Sorry if I come across a bit defensive btw, I just feel that as a broker I have to fight our corner when required.
scotal said:
That's the tough bit though. Finding a reputable broker of any sort in financial services is tricky. Rather like a good mechanic or builder, word of mouth recommendation is the best way. IMHO The exams required to get into the idustry are way too easy, and the industry is set upon a course of sales volume above all else. I'd like to think I am a reputable broker. I'd really like to think that in 5 years time, financial services will have changed out of all recognition to become the industry/career it should be, but unfortunately, like you, I'm a cynic.
Looks like we both agree then, very well put. Not knocking all brokers but, like you say, with any industry you have to find the right ones, which is the same for banks which is the side of the fence I am on.
With the interest rate change today I would guess anything lower won't be around after the weekend.
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