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  • Writer's pictureeddge

Rates continue to head in one direction

You may have seen in the media over the last few months a good few mentions of the mortgage war. Sounds very dramatic doesn’t it? Thankfully, it’s not, as some might think, lenders taking to the streets to do battle with each other. Rather, it’s the continual decrease in headline rates that borrowers can hope to obtain to fund their homes.

This week, the war reached fever pitch with both HSBC and TSB launching products with rates of 0.94%. HSBC has confirmed that it is the lowest rate they have ever offered. For those of us that have been around the block (several times), rates that have ever been offered below 1% can be counted on the fingers of one hand.

Of course, for some borrowers, this is incredibly good news. But, as with all mortgages, the devil remains firmly in the detail. To qualify for the HSBC rate, you’ll need a 40% deposit (or the same amount of equity in your home if you are remortgaging) and it comes with an arrangement fee of £999, which is pretty standard these days. In addition, if your credit score is anything other than as clean as the proverbial whistle, you’re unlikely to be offered the rate.

There are two key things to take from this. Firstly, whilst not everyone will qualify for the loan, most mortgage rates are heading south for the summer. So, even those borrowers with less money for a deposit or less equity are being offered some pretty tantalising rates. That’s a big tick in the box.

Secondly, if we can be so bold, it brings into light the key reason to use a mortgage broker. We will help you weigh up the true cost of all mortgages, look at your future plans and aspirations, and find the right mortgage for you. And all too often that isn’t the cheapest one with the lowest rate. To use the HSBC mortgage as an example. For any borrowers who need less than £500,000, you’d be better off over the course of the loan taking another of HSBC’s mortgages with a rate of 1.14%, because it comes with no arrangement fee.

As ever, if you need advice and help, we’re here for you.

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