A journalist at the Guardian is seeking a few lines urgently on sub-1% deals, e.g. HSBC today. Keep it short and sweet. Who can realistically get these deals (low LTV, perfect credit score)? Are they a marketing gimmick more than a volume product? Any other thoughts? 2-3 sentences max!
8 responses from the Newspage community
"Platform Home Loans (a division of the Co-operative Bank), HSBC and the lesser know Hinkley & Rugby Building Society all currently have deals available with a pay rate below 1.00%, which is great if you have impeccable credit, a standard source of income and a very large deposit. These products are great for a minority of consumers and certainly put these lenders at the top of best-buy tables, but for many potential borrowers - with more complex needs or smaller deposits - these attractive rates are sadly out-of-reach."
"Lenders seem to be starting their Summer Sizzler season a little earlier than usual with a plethora of rate cuts, including a couple of two-year fixes available below the 1% level as the battle to retain that competitive edge and market share signals the possible return of Mortgage Rate Wars to come. "As ever these deals are available to the most attractive borrowers in terms of income multiples and having at least 40% equity or deposit, but we have seen reductions in rates at higher LTVs as well. "Although the housing market has been running on rocket fuel for a while now, lenders are keen to avoid a slowdown as the Stamp Duty holiday ends and a return to the pub, holidays and a long summer beckons."
"The noise around these 'sub-1% deals' is overrated with certain well known financial TV journalists with large followings making broad brushstroke statements like 'mortgages rates are below 1%' causing a flurry of nonsense to be written in the press. "In reality, there are only 2 fixed rate deals (out of thousands of other available mortgages products) — one at 0.99% (HSBC) and one at 0.95% (Platform) both with fees of either £999 or £1499 and they're currently only fixed for 2 years. You need to have at least 40% deposit to even think about them along with a pretty much perfect credit history over the past 6 years. In reality, these rates are not about saving customers money as much as they are about generating headlines." They are nothing more than a marketing gimmick and would not be suitable for the majority of people but they make a good headline and generate online activity as people start rate shopping. In reality the purchase price would need to be in excess of £700,000 when factoring in the fees applicable to make those deals the most competitive due to the size of fees that are payable on them, along with other considerations. So yes they are gimmicks. As always we'd advise speaking to a good quality independent mortgage broker and getting professional advice that's suitable to your circumstances rather than listening to the nonsense pushed by some in the media.
"Grab them whilst they're hot. Lenders have been battling it out on price for months and this feels like it could be the peak of opportunity to benefit, before rates inevitably rise again. "These deals are only available for low risk applicants with good credit scores and low loan-to-values but if you for this criteria you deserve to be rewarded."
"These fantastic low rates are available only to those with equity or savings of 40% of the property value." "It takes money to save money. On UK average house price, you need £100,000 in savings or equity, increasing to £205,000 in London."
"The race to launch sub-1% mortgages seems as much about grabbing headlines as it does market share. In reality, these record low rates are only available to low-risk borrowers with high deposits of 40% or more. "They also tend to be 2-year products, offering minimal security to those preferring the certainty of a longer-term fixed rate. Coupled with the higher fees of up to £1,500 on the sub-1% deals, many borrowers may find a 5 year fixed rate at sub-1.2% presents a more secure, cost-effective option."
"It's great to see sub-1% rates as it shows how far lenders are willing to go to win business which is good news for borrowers. However, these products are only available to those with either a 40% deposit or equity in their property therefore will mainly be taken up by people moving home or remortgaging. With extremely high demand, it is unlikely these deals will stay around for long so borrowers will certainly need to act quickly if they wish to benefit from rock bottom interest rates."
"This is yet more evidence that it is a great time to be a creditworthy borrower with a large deposit. "The opposite is true for those with poor credit , complex income and small deposits where you can pay as much as 5% and sometimes even more. "We are still bumbling along at the bottom of the interest rate cycle; what we don't yet know is for how much longer. In the interim, we are bordering on it being rude not to borrow some money at these rates, provided the borrower can service the debt."