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‘Mix and match loans are winners over overhangs and long fixes’

Hamptons International Mortgages has set out what it thinks will be product winners and losers for the mortgage market in 2005.

Speaking at Mortgage Expo in London last week, managing director Kevin Duffy said mix and match products such as partfixed, part-tracker products either with or without pen-alties are “product heaven” because of the flexibility they give.

Duffy said lenders such as Halifax and Cheltenham & Gloucester get business from Hamptons because they can provide these types of products.

But Duffy said he feels frustrated when other len-ders say they cannot provide these products due to technical difficulties and complications with IT systems.

The success of these types of mortgages dep-ends on the lenders’ back-office capabilities.

Technical director Jon-athan Cornell said the worst sort of products are those with extended over-hangs. He described a two-year fixed rate at 2.8 per cent with a five-year tail period on an SVR of 6.8 per cent as disastrous bec-ause it would result in the payment on an interest-only payment almost tripling after the two-year fixed period.

Very long fixed rates with early redemption charges, where the redemption penalties are greater than the size of the loan, are also out of favour with Duffy.

Cornell said: “As for the future, as swap rates continue to fall, there will be higher take-up of fixed rates rather than discount mortgages.”

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