by Mark Johnston
HSBC and First Direct Launch New Deals!
It seems that HSBC and First Direct have yet again shaken up the mortgage market with extraordinary new market-leading fixed rate mortgages.
The HSBC is offering what they state as the lowest ever seven year fixed rate mortgage deal which is available up to 90 per cent of the property’s value at a rate of 4.89 per cent.
While this seven year deal is the ‘lowest ever’ many experts feel that this is due to the fact that not many other lenders have that wide of a range of seven year fixes, therefore there is little competition.
This deal comes as part of their new range of fee-free first-time buyer mortgages. The deal is that the borrower chooses their preferred fixed rate duration which can be either two, three, five or seven years and there are no arrangement fees on any of these mortgages.
It is hoped that this deal will help to drive competition in this sector of the market.
First Direct, which is part of HSBC, is offering a new 3 year fixed rate offset mortgage, however it is aimed at borrowers with a hefty 35 per cent deposit.
The deal is fixed at an extremely low rate of 2.74 per cent for three years but it does come with a sizeable mortgage arrangement fee which is £1,499.
According to the lender it is the lowest three-year fix (across both offset and non-offset deals) since 2007.
It may be worth considering that a lowest ever rate that comes with a highest ever fee may not actually work out as competitive as first thought. However, it often can be worth paying a high fee for a low rate over a large mortgage, but those looking for a smaller mortgage may benefit far less.
Although, financial experts feel that there really is no need for such huge fees and lenders should up the interest rather than tricking borrowers with lower rates and massive charges.
It is also very important that borrowers are aware that the First Direct offset mortgages are only available on an interest-only basis. This means that all monthly repayments will only cover the interest and therefore at the end of the deal the full mortgage amount will be payable.
The new range is available for a limited period only and the banks state that all applications needing to be made before 14th October 2012.
It is also worth noting that both of these deals are only available to direct applicants and not through a mortgage adviser and also the offset deal is only available to those customers who already hold a current account with First direct.
The lender has also stated that they reserves the right to withdraw the deal sooner, asthey did do recently with their previous low deal.
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