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The mortgage is designed to appeal to customers facing the dilemma of whether to keep tracking to preserve the flexibility to make overpayments, or benefit from the security of locking into the historically low fixed mortgage rates. HSBC’s Split Loan Mortgage lets them have the best of both worlds.
Customers will be able to choose to fix 25, 50 or 75 per cent of their loan, with the remaining percentage on a lifetime tracker, at exactly the same rate as the fixed proportion. The actual interest rate will depend on the proportion of the mortgage which is fixed and the LTV of the mortgage. The mortgage deal has only one booking fee of £999 which covers the fixed and tracker loans and is available to customers looking to borrow up to £500,000.
With the current Bank of England base rate at just 0.5 per cent and signs that the economy is improving, the uncertainty of whether to fix or not to fix is mounting. This uncertainty is not helped by the lack of consensus among economists’ predictions, with the differing extremes of the base rate increasing from this month, to no increase until mid 2011.
Martijn van der Heijden, HSBC’s head of mortgages, said: “It is impossible to predict exactly when interest rates will start to rise and borrowers are facing the potentially costly dilemma of whether they should fix or take advantage of the historically low rates with a variable mortgage. Our consumer research shows many households on trackers or standard variable rates feel they should lock in some of the benefit of the low base rate but are not sure how or when. HSBC’s new Split Loan Mortgage is an innovative solution for borrowers as they can benefit from a super low rate but also the peace of mind from their fixed portion.”
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