Borrowers unsure whether to fix or track

The bank says take-up of its split loan mortgage, which allows customers to fix a proportion of their mortgage and apply a BBR tracker rate to the remainder of the loan for its lifetime, has seen borrowers opt for a fifty fifty split on the deal.

HSBC believes this is evidence that homeowners are equally torn between fixing and tracking, prompting the lender to extend the period of the fix to seven years, and extend the application deadline for the split loan mortgage to the 1st August 2010.

Martijn van der Heijden, HSBC’s head of mortgages, said: “The ongoing debate around when interest rates are likely rise as well as conflicting predictions on house prices is adding to the confusion for homeowners. The split loan mortgage is proving to be a popular solution, so to increase the choice, we are offering customers the option to bolt HSBC’s longer term fixes together with our nil booking fee trackers, meaning they can split their mortgage for up to five or even seven years.”

The existing split loan offer continues to allow customers to fix 25% or more of their mortgage for two years at a single rate starting as low as 2.49%. The new range opens up possibilities to fix for longer, for instance fixing a proportion of the mortgage for five years at 4.79% with an arrangement fee of £999 and combining this with a nil booking fee Lifetime tracker, which tracks at 2.29% above the Bank of England base rate (currently 2.79%) for the life of the loan.

HSBC added: “Recognising that many people are postponing financial decisions until after the forthcoming emergency budget, we are extending the period during which homeowners can apply for a split loan mortgage to the 1st August.”