moneysupermarket.com – HSBC Split Loan Mortgage
Commenting on the launch of HSBC's Split Loan Mortgage, Hannah-Mercedes Skenfield, mortgage channel manager at moneysupermarket.com, said: "Interest rates are at a record low and we know the next move will be upwards so many borrowers' gut instincts could be telling them that now is the time to fix - indeed we know from our own user feedback that the decision between a fixed or tracker rate and prospect of a rate rise are the things that worry borrowers most. Fixed rates are, on the whole, currently more expensive than trackers, so whilst borrowers could opt for a variable rate and benefit from lower payments initially, this could still leave them exposed should rates rise quickly. HSBC has rightly addressed these concerns with the launch of their Split Loan mortgages which give borrowers the option of fixing part of their loan and having the rest on a tracker rate. This means that borrowers won't have to gamble on when to fix, and in theory, they should be able to access all the benefits of a low rate fixed rate coupled with the flexibility of a tracker.
"Some may argue that this product will only really suit borrowers who may be looking to protect themselves against any future base rate rises. However, borrowers who are convinced rates will remain low for the next couple of years should also consider this product. At 70 per cent LTV, if you fix just 25 per cent of your total mortgage, you will find your fixed and tracker rates match the current best buy two year tracker mortgage - 2.49 per cent from the Yorkshire Building Society, which is a no-brainer.
"There are some really important plus points with this product. Firstly, it is available at 80 per cent loan to value (LTV). Secondly, there is only one arrangement fee charged, whereas previous similar products have come with two fees. And thirdly, HSBC seems to have brought down its fixed rates within this product, rather than simply offer existing fixed rates alongside an expensive tracker deal. All in all, this means that HSBC has put together a pretty tempting product for any consumer who is unsure about whether or not to fix in the current environment."
"HSBC should be applauded for trying to innovate in a market which has seen very little positive change over the last couple of years. However, this product isn't a world first; in fact split mortgages like this are fairly popular overseas, most notably in Australia, New Zealand and Canada. It's also worth noting that while HSBC is the first to launch a specific split mortgage product, some providers already offer this arrangement in various forms; for example, allowing customers to put part of their mortgage on a fixed rate and part on a tracker or discount rate."