SKIPTON BUILDING SOCIETY
Stateside Tracker Mortgage
Type: Tracker mortgage
Tracker term: Until November 30, 2008
Tracker rate: US dollar Libor rate plus 1.85%
Payable rate: 2.99%
Minimum loan: £5,000
Maximum loan: Up to 95% of valuation subject to a maximum of £150,000
Income multiples: Up to 3.5 times principal income plus second or 2.75 times joint
Arrangement fee: £395
Redemption fee: 5% of mortgage balance until November 30, 2008
Introducer's fee: Subject to negotiation
Tel: 0845 850 1711
Skipton's stateside tracker mortgage tracks the US dollar Libor rate until November 30, 2008 and has a current payable rate of 2.99 per cent.
Casting his eye over the product features London and Country mortgage specialist David Hollingworth says: “The main feature that catches the eye is the extremely low rate this product offers. It achieves this by tracking the 3-month US dollar Libor rate, which has historically been lower than the Bank of England base rate. It effectively takes advantage of the lower rates in the US without the borrower having to take any currency risk. The product also offers some help with the set-up costs for remortgage borrowers in the shape of free legal work.”
Hollingworth's main concern about the mortgage is that borrowers may only see the headline rate and not understand how the product works. He points out that the Libor rate is variable and there is no guarantee it will remain lower than the Bank of England base rate. He also feels the five-year lock-in period could make this mortgage unsuitable for some borrowers.
“The deal is a five-year tracker and carries penalties throughout the tracking period. This could prove too long for many borrowers who would prefer to have the option of reviewing their mortgage arrangements earlier,” he says.
Hollingworth believes there are no current five-year discounted rates to touch this mortgage but adds those looking to take a shorter term deal could look for a two-year discounted mortgage at a similar rate.
Assessing the main competitors for the mortgage, Hollingworth suggests Pink Home Loans' international reserve product. This is fixed at 2.99 per cent until the end of 2003 and then tracks at 1.35 per cent above the average of the 3-month US dollar Libor and 3-month Euribor rates until the end of 2010. It also locks the borrower in for that period of time and so has a longer penalty than the Skipton product.
Suitability to market Fair
Competitiveness of mortgage rate High
Adviser remuneration Fair