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HSBC drops mortgage rates for first time buyers

[ Posted November 25th, 2011 ]

Although the mortgage market is seeing its rates increase across the board amidst fears of the debt crisis worsening in the Eurozone HSBC announced this week that it would drop its mortgage rates down to 3.84, a ten percent decrease, for first time home buyers that can only afford a LTV of 90%.  The news should help many first time home buyers that have been kept out of the market due to the high deposits demanded by most banks in order to secure a mortgage, but the price tag may still be too high for those not willing to commit to a mortgage with so much uncertainty surrounding the economy,

HSBC announced the new deals would be aimed at those interested in two year fixed mortgages and that it would make £350m available to borrowers that take advantage of their new lowered mortgage rates before the close of 2011.  Also enticing is the fact that the deal will be available without any attached fee and according to HTC this is the only offer on the market for first time buyers with a low LTV available on the current mortgage market today that sits under 4%.

The first two years of the deal will have a mortgage rate set at 3.84% after which point buyers will be automatically switched to whatever the current standard variable rate is which is still a slight risk to some but a great way to get a foot up onto the property ladder for those who have been unable to in the past.  HSBC claims that their new deal will help prospective buyers without a deposit actually secure a mortgage that they can afford so that they can start to build equity and a secure future for themselves and their families.

However, financial analyst Andrew Hagger warned potential buyers that there is a risk in signing into the deal since it will switch to the SVR at the end of the two year term which can be altered by the bank to any term unlike a base rate tracker that is set by the base rate.  Therefore, there is not a guarantee that the mortgage will stay affordable to home owners once the two year period is over making it a risky venture to take on even with the thrill of a low deposit.

30 year fixed mortgage rate drops

[ Posted November 23rd, 2011 ]

The average rate for fixed mortgages set on a long term basis dropped by about 4% this week; weighing in at about 3.98% on average this week.  Home owners that are looking for the security of a fixed mortgage long term due to the uncertain economic situation in the EU would do well to take advantage of the rate as mortgage rates in general have been increasing this week and slowly over the last month as it seems that the housing market may have reached its final low.

This is good news for those willing to sign into a long term mortgage and good news for the Housing Secretary who has been asking banks to consider offering more long term fixed mortgages in response to the economic uncertainty that has kept many first time home buyers from purchasing a home.  However, despite this fact, evidence still proves that most home owners do not like the idea of making such a long term commitment when the housing market is so unstable that standard variables look like the best option to most home owners who are contemplating how to get the lowest rate on their mortgage.

In fact, outside of two weeks over the course of this year the average mortgage rates have sat below five percent making this a great year for taking out a low interest mortgage.  A combination of factors have kept mortgages low including the economic recession, the low home buying ratios, the low Bank of England base rate, and the fact that banks have had to heavily compete for the small amount of mortgages that they actually gave out this year.  In fact, this year will possibly be the worst in terms of home sales in the past twenty years.

Yields fell farther this month and week as most investors are choosing to move their money into different treasuries amidst fears that the economy is going to fall into a double dip recession, the uncertainty of the stock market, and the debt crisis in the Eurozone.  Low unemployment rates, increased redundancies, and the high deposits needed in order to secure a mortgage have also kept many first time home buyers from buying a home which has in turn turned the housing market in the UK into a rental market making it harder for banks to lure consumers into a long term mortgage.

Mortgage lending continues to decline amidst falling home values

[ Posted November 19th, 2011 ]

Forced First Time Lending for Fixed Mortgages Will Fail

[ Posted November 18th, 2011 ]

How the European Central Bank interest rate slash affects Britons

[ Posted November 4th, 2011 ]

The surprise announcement this weak that the base rate of the European Central Bank was slashed by another quarter down to just 1.25% came as a shock to most, and helps to cement the current prediction by many experts that the interest rates within Britain are going to stay low.

This is good news for those with mortgages as it will likely help to keep the mortgage rates low in Britain as well, although those who are attempting to build a savings account are going to be hurt by the news.  Analysts are also now predicting that the ECB will cut rates more helping to keep mortgages low.

Those who are signed into tracker mortgages should be happy with the news as this means that their variable rates are going to stay low creating some of the best mortgage rates on the market for at least another few months. This comes as a surprise as most market experts have been warning that the mortgage market is going to come back around, but instead it seems that rock bottom only continues to be redefined, making a variable mortgage the best choice on the market, albeit a bit risky.

However, on the flip side of the equation is the facts that while everyone is enjoying the low mortgage rates, those who already have their mortgage paid off and are simply looking to build a savings account, such as pensioners, are suffering from the news. They will continue to find that their payouts on deposit accounts will continue to be lower than expected every month not yet rising to match with the raising costs of inflation. With the continuing turmoil in Greece this is a factor that is not likely to change either.

This is just one of the many issues that the slash in the ECB raises for now, as there will be plenty more associated with the fact that the way corporations are now making their money which relies on cost cutting instead of growth within one’s market. This combined with other factors over time is going to hurt the fragile European economy making the next few years look a bit shakier at best and a great deal more unstable than it already is at the worse. For this reason alone, anyone contemplating a mortgage should tread lightly and carefully.

 
 
 
 
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