Pick a mortgage champion rather than a relegation contender

With the start of the Premiership this weekend, John Charcol takes a look at the current fitness of the market and picks the mortgage winners and relegation fodder.

Drew Wotherspoon of John Charcol comments, “Following the latest decision by the Monetary Policy Committee to keep interest rates on hold, we have finally seen some stability in the mortgage market. In fact, there is even a suggestion that rates may have peaked. At this point, if you do not need the absolute security that a fixed rate provides, it looks like trackers will provide better value over the term of a 2-year mortgage.

“The current Manchester United of the mortgage world is undoubtedly a 2 year discount from Saffron BS, with a current rate of 5.45%. The key to this deal, as well as having a market-leading rate, is that it has no early Repayment Charges (ERCs) at any time. For remortgages it also has free legals and a free valuation, however it is only available for loans up to £250,000. Therefore, for those who need to borrow more, the current Chelsea of the mortgage world is a 2-year tracker from Halifax with an initial rate of 5.39%. This has a minimum loan size of £500,000, about what Frank Lampard earns in a month, and is fully flexible.

“The biggest threat for relegation has to come from 25-year mortgages for first time buyers. Much has been said on this recently but there is virtually no case for a first time buyer to take such a long term loan. The chances of someone staying in their first property are very slim, so many of these products are effectively lining up first timers for big penalties when they try and redeem their mortgage. There are plenty of more sensible suggestions for first time buyers who would be wise to seek advice on their specific situation.

“And finally, news this week that HSBC has removed fees from all new mortgages until the end of September, but has increased the interest rate to 6.69% for a standard 2-year fix, would seem to be something of an own-goal. Borrowers shouldn’t be swayed by seasonal propaganda – there are much better deals out there to be had.”