- moneysupermarket.com urges consumers not to be drawn in by headline rates
" There is no doubt that the mortgage market is in need of some good news and lenders lowering rates should offer just that however these products underline a growing trend in the mortgage market, which is that much of the innovation seems to be targeted for marketing impact, rather than real borrower benefit."
New mortgage launches:
|
Lender |
Pay Rate |
Type |
Period |
Max LTV |
Arr/Bkg Fee |
|
Woolwich |
1.98% |
Tracker |
1 Year |
60% |
£999 |
|
HSBC |
1.99% |
Discount |
2 Years |
60% |
£1,199 |
|
First Direct |
2.79% |
Tracker |
Term |
60% |
£999 |
|
Halifax |
2.99% |
Fixed |
2 Years |
60% |
2.5% |
Hannah-Mercedes Skenfield continued; "Any reductions in mortgage rates are welcomed however, with all these low rate offers flying around, borrowers could be forgiven for thinking that lenders really are beginning to loosen the purse strings again. The vast majority of the market is unable to access these deals as nearly all new headline rate launches are restricted to a minimum of 60 per cent LTV. moneysupermarket.com figures show that only 33 per cent of potential borrowers have this kind of deposit.
"Even those that do have the necessary funds would be well advised to get out the calculator and see whether or not the deal works for them. Halifax's 2.99 per cent fixed rate mortgage, for example, works out more expensive than some higher rate products (see below) as it charges a whopping 2.5 per cent arrangement fee.
|
Fee Product Comparison |
|
|
|
|
|
|
|
|
Capital & Interest |
first direct |
Leek United |
Halifax |
|
Loan Amount |
Total Cost over 2 Years (3.49% + Arr £1,298 fee) |
Total Cost over 2 Years (3.59% + Arr £799 fee) |
Total Cost over 2 Years (2.99% + Arr 2.5% fee) |
|
£50,000 |
£7,358.72 |
£6,925.72 |
£6,986.48 |
|
£100,000 |
£13,419.68 |
£13,052.68 |
£13,972.72 |
|
£130,000 |
£17,056.16 |
£16,728.76 |
£18,164.56 |
|
£135,000 |
£17,662.16 |
£17,341.48 |
£18,863.16 |
|
£140,000 |
£18,268.40 |
£17,954.20 |
£19,562.00 |
|
£150,000 |
£19,480.40 |
£19,179.40 |
£20,959.20 |
|
£160,000 |
£20,692.64 |
£20,404.84 |
£22,356.40 |
|
£170,000 |
£21,904.88 |
£21,630.28 |
£23,753.84 |
|
Sourced by www.moneysupermarket.com 14.09.2009 |
|
|
"It would be great to see providers launching products that would benefit a greater proportion of the market, rather than chasing headlines. The majority of people looking for a mortgage don't have a 40 per cent deposit, and might not realise the extent to which the arrangement fee affects the real rate of return for the lender. Unfortunately for now, the market is cluttered with products that look great in the branch window, but are not adding value to consumers.
"Choosing a mortgage is one of the most important financial decisions we make in our lives, so it makes sense to shop around and do the maths to make sure you get the best deal possible, rather than be seduced by a headline rate."
- Ends -
Notes to editors:1. Based on moneysupermarket.com mortgage search figures for August 2009
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