HSBC axes fees for mortgage customers

HSBC are dropping the fees on their entire tracker mortgage range as well as allowing customers to switch to a fixed rate deal with no additional charges

Mortgage borrowers have been due a bit of a sweetener recently. And now HSBC has thrown them one.

Right up until 5th June, all HSBC tracker mortgages will be available with zero fees. What’s more, the lender is also guaranteeing that a fee-free fixed rate option will be available until 31 December 2011 for new tracker customers, so long as their mortgage is no more than 80% of the property’s value.

Let’s take a closer look...

Fee free

HSBC has removed all booking fees, standard valuation fees (for one valuation when required by the lender) and completion fees on all tracker mortgages taken out before 5th June 2011. This means that if you’re with a lender that charges no exit fees at the moment, you’ll be able to switch to a tracker at no cost – other than any early-repayment penalties that your current provider may levy.

To help you figure out if you fall into this category here’s a list of lenders that charge no mortgage exit fees:

Source: Defaqto

But with many predicting a base rate rise soon, is it really a good time to get a tracker?

A good time to track?

Journalists here at lovemoney.com have been to-ing and fro-ing about tracker mortgages for a while now. And the honest truth is no one will be able to provide you with a definitive answer to this tricky question. So with the market still so unstable, why has HSBC decided to cut tracker fees now?

Well on one level, figures out this month showing that inflation has fallen back to 4% CPI will ease the pressure on the Bank of England to up interest rates. This makes mortgages that track the base rate a slightly safer option for those after the lowest interest deal.

But as well as this, HSBC tracker mortgages are actually very competitive. If you can stump up a 40% deposit then you’ll be able to snap up a deal that tracks at 1.89% above base rate. That’s a 2.39% rate currently

HSBC will also allow you pay a single chunk of your mortgage off in one go without incurring any fees. This is a seriously clever thing to do – especially if you’re currently sat on a low tracker rate – as it will slash your payments in the long run, even if rates do start to rise.

Here’s a table detailing all of HSBC’s current best buy lifetime tracker deals:

Yes, if you take out a tracker it’s very likely that you’ll see your rate rise in the next year when the base rate is upped, but this might not be as painful as you think. Most experts are predicting that the Bank of England will not increase the base rate to anything more than 2% this year. So if you take out HSBC’s 60% LTV tracker, your rate will only increase to 3.89%. And if you’re on the 70% deal, you’ll be bumped up to 4.19% and 4.49% if you go for the 80% option.

But if you do find yourself with an inflated and uncompetitive tracker rate, HSBC is offering a fee-free way out...

Fix – for free!

HSBC is also guaranteeing that any customer who takes out a tracker mortgage of 80% or less before 5th June, will be able to switch to a fixed rate deal – for free. Providing they do it before 31st December 2011 that is.

This is a very good option for those wanting to cash in on the current low interest rates without committing themselves to a long-term deal that could come back to bite them if the base rate rises.

Here’s a run-down of HSBC’s current fee-free deals:

While these mortgages aren’t all the best buys on the market, they’re still fairly competitive. However if the base rate does increase, they may all change – so don’t depend on these rates being around all year long!

Go elsewhere

In fact, if you do go for an HSBC tracker and then decide to ditch it for a fixed-rate, you shouldn’t automatically stick with HSBC. That’s because the bank has also dropped all early-repayment fees for new tracker customers (even those on 85% and 90% deals), meaning you could switch to another provider without paying any charges to HSBC when leaving them.

A good way to get a concise idea of the current fixed-rate market if you’re thinking of switching out of your tracker deal is to contact a mortgage broker – such as one of our FSA-regulated brokers here at lovemoney.com.

And of course you can also use our mortgage tool to compare all of the current market leading deals.

Downsides

The main downside to this deal is that HSBC is a notoriously tough lender. So you’ll need to have a spotless credit record to be accepted by the bank. Because of this it’s a good idea to use HSBC’s mortgage affordability calculator on their website before going through with an application.

Woolwich and Nationwide are also offering switch and fix deals to tracker customers who want to ditch their current mortgage for a fixed rate product without incurring any Early Repayment Charges. However you may have to pay fees when you take out the fixed rate mortgage if you opt for one of these deals.

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