Advisers have urged intermediary lenders to follow HSBC’s launch of a split loan mortgage, which allows borrowers to fix a proportion of their mortgage and track the bank rate with the remainder.
Brokers are keen on the new product, which allows a client to fix 25, 50 or 75 per cent of the loan, with the rest on a lifetime tracker. HSBC does not lend through intermediaries.
Interest rates depend on the loan to value and proportion of the mortgage which is fixed. They start at 2.49 per cent for a 25 per cent fixed/75 per cent tracker deal at a 70 per cent LTV. There is a £999 fee and maximum loan is £500,000.
Chadney Bulgin director of mortgages Jonathan Clarke says: “We would like to have these sort of products. It is a shame that HSBC do not deal with brokers. They are obviously hoovering up at the moment with some of the products they have.
“It is not a new idea but some people might like the sound of it. They are coming out with some clever products.”
Coreco director Andrew Montlake says it is a decent product but adds: “The thing that really concerns me is that it is available without advice and, with this type of product, people should be getting advice. They are cracking rates. Hopefully, it will spur intermediary lenders to offer similar products at similar rates.”
Stroud & Swindon’s intermediary arm ITL recently launched a drop-lock mortgage offering a compromise between the benefits of tracking bank rate while it remains low but with the security of switching to a fixed rate at any time without penalty.
Sales and marketing director Linda Will says the drop-lock product already serves a similar need, so there is no reason for ITL to launch a similar product to the HSBC deal.
She says: “I would not see any reason for us to look at creating a hybrid of this nature.”