The 1.99% mortgage
HSBC’s 1.99% mortgage has certainly got a lot of column inches in the last few days with many commentators saying that this is the start of the banks loosening the purse strings and easing the flow of credit into the housing market.
I’m not so sure. As ever the devil is in the detail and on this occasion the detail is a 60% loan to value and a whopping £1199 arrangement fee. It’s clear that this is a product is aimed at those who have already been on the housing ladder for some time have generated considerable equity in their current homes and want to move from a 3 bedroom into a 4 or a 4 bedroom into 5. For this market it certainly appears to be an attractive product and demonstrates that our banks are feeling a little more confident about the housing market in general.
But this is still a cautious move by HSBC and does little to help the first time buyer or those wanting to move from rented accommodation and take advantage of low house prices. For them the limited number of mortgages available at the 90+% loan to value level remains a problem. The answer lies with shared equity schemes such as Home Buy Direct and MiWay which can help people make that first step. We already know from experience that products like Home Buy Direct can help but you need to act fast because they won’t be around forever.