Safe as houses?
Home watch
Will home owners and prospective borrowers feel the crunch in 2009?
With the base rate at a record low, it seems like good news for borrowers,but the mortgage market is dominated
by four lenders (Abbey, Lloyds/C&G, Barclays/Woolwich, and HSBC). This lack of competition may prevent actual
mortgage rates reaching the same low point. Mortgage holders coming to the end of their rates will find competitive
products made available to them. It’s essential to check what’s on offer and compare to the rest of the market.
HSBC has promised an increase in lending this year and, if they follow their strategy last summer and offer
market-leading rates, it may be difficult to beat. However, borrowers need to check the fees carefully. The
best rates offered last summer had extortionate costs attached making them less cost-effective than some of
the higher rates available.
Lenders are under pressure to pass on all base rate cuts but this alone is not enough to get the market moving and
prevent house prices falling further. Quality rather than quantity was the focus in 2008 leaving prospective
borrowers with small deposits facing tightened criteria and higher rates. Hopefully, they will start to relieve
some of that this year and entice back the much needed first time buyers to the market.
Typical current mortgage rateism
| LTV | Type | Rate | Term | Fee | APR |
| Up to 60% | Tracker | Base +2.35% | Lifetime | £995 | 4.10% |
| | Fixed | 4.15% | 2 Years | £995 | 4.60% |
| Up to 75% | Tracker | Base +2.59% | 2 years | £995 | 4.60% |
| | Fixed | 4.29% | 2 years | £995 | 5% |
| Up to 80% | No tracker deals available above 80% |
| | Fixed | 4.99% | 2 years | £995 | 5% |
| Up to 90% | No tracker deals available above 80% |
| | Fixed | 6.09% | 2 Years | £995 | 4.80% |
Based on a purchase price of £250,000 with the arrangement fee added to the loan.
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