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fixed rate mortgage

58 posts & 25 voices | Started 8 months ago by adt | Latest reply from ChrisE

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brassneck - Member

As a Nationwide customer, I would say avoid - there are cheaper offerings with better customer service out there.

I had a shocking example of service that ended with the branch manager calling me to apologise - not going into details as it concerns financial info I'm not going to air on a public forum, but my fixed ends in a year and I will not stay regardless of the deal they offer me.

I personally wouldn't fix - make sure you have the flexibility to fix in the future but with rates as low as they are you should have plenty of time to asses your options when rates rise, and enjoy lower payments in the meantime.
If you're on the ragged edge of borrowing at these rates, I would think very carefully about whether you're doing the right thing or should rasie more deposit.

Posted 8 months ago #
tonyd - Member

Good luck!

Also agreed that with enough research you can make a more informed decision and maybe get it right. However I think the vast majority of folks that have 'won' (or 'lost') would agree that a lot of that was down to luck rather than judgement.

Posted 8 months ago #
toys19 - Member

However I think the vast majority of folks that have 'won' (or 'lost') would agree that a lot of that was down to luck rather than judgement.

For me it was luck that my wife had good judgement.

Posted 8 months ago #
tonyd - Member

For me it was luck that my wife had good judgement.
But you must agree you're probably in the minority?

A lot of people took out fixed a few years ago thinking rates would rise, yet they went to all time lows very quickly. Likewise a lot of people are taking trackers now thinking rates won't rise for a long time. I'm not calling right or wrong, just trying to point out that making assumptions can be risky.

Posted 8 months ago #
brassneck - Member

A lot of people took out fixed a few years ago thinking rates would rise, yet they went to all time lows very quickly. Likewise a lot of people are taking trackers now thinking rates won't rise for a long time. I'm not calling right or wrong, just trying to point out that making assumptions can be risky.

I agree, but skewing the figures somewhat is that ALL the advice I got around 4 years ago was to fix as rates were bound to rise. So either everyone was wrong, or everyone was lying

This isn't helping is it?

Posted 8 months ago #
andyl - Member

toys19 - Member
For me it was luck that my wife had good judgement.

Maybe she's learnt from a previous major mistake?

Posted 8 months ago #
tonyd - Member

but skewing the figures somewhat is that ALL the advice I got around 4 years ago was to fix as rates were bound to rise. So either everyone was wrong, or everyone was lying
And now the general consensus seems to favour trackers.

This isn't helping is it?
Probably not, shall we be quiet now?

Posted 8 months ago #
toys19 - Member

Well your logic does not apply to my thinking, you are thinking "get a fix to reduce risk" whereas I think a fix is a bigger risk than a tracker.

I would say that the majority of people believe the crap the banks tell them so they have taken fixes and lost out, the minority of people are cynical about the banks and go for a tracker and have done much better.

It is patently obvious that if the bank are convinced rates will rise they will not fix at a rate lower than what they expect it to go to. Do the opposite of what the bank tries to sell you and you are leveraging the same opinion of their economists.

Posted 8 months ago #
tomaso - Member

At present trackers offer the lowest possible rate and with the Bank of England base rate at an all time low it is as low as it will ever get. Although it seems likely that interest rates will stay low the only chage there can be is up. If and when that happens and by how much is anyones guess.

Fixed rates are also at an all time low and there has been renewed competition to lure the remortgage market onto new products as people come out of their deals.

I've just fixed for 5 years for a tiny fee at 3.49% with my existing lender.

I am not in a position to gamble and appreciate the security of fixing. My first mortage was a tracker and went up almost every month and made life difficult at the time and this experience has made me reluctant. However, if I'd been on a tracker for the last 2 years I'd be quids in. But I haven't got a crystall ball and I am a shite gambler so a fixed it is.

Posted 8 months ago #
toys19 - Member

Bank of England base rate at an all time low it is as low as it will ever get

That is your assumption. Rates could go lower. There has been talk that they could go lower and the BOE considers rates in basis points which are 100ths of a percentage point. So they could cut by a single basis point 0.01%, not 25 points as the assumption of the smallest division. I think there is as much a possibility if rate drops as rises (IE I don't know, but I will not assume that they cannot go lower).

Posted 8 months ago #
Ro5ey - Member

+ lots. Without wanting to derail the thread, a house should be a home not an investment.

Poppycock

With 0% you could end up pay 120k for something that is worth 100k.

Are you telling me you DONT want your biggest assest rising in price?

Posted 8 months ago #
toys19 - Member

I agree, but skewing the figures somewhat is that ALL the advice I got around 4 years ago was to fix as rates were bound to rise. So either everyone was wrong, or everyone was lying

Well I think the more the banks push fixed rates, the more they want you to have a fixed rate. Make your own judgement.

Poppycock
With 0% you could end up pay 120k for something that is worth 100k.
Are you telling me you DONT want your biggest assest rising in price?

Well I dunno if it's poppycock, even at 0% they might not fall, and if you have already purchased it would still be nice to have lower interest rates, it won't last forever and your 120k house in 25 years time will be worth lots more than you paid for it, even with a glitch along the way. The thing is that glitch might allow you to pay it off much much earlier and give you financial freedom.

Posted 8 months ago #
ebygomm - Member

A lot will depend on your LTV. The variable rate that we could get was so far up above base that we'd only have needed a 1% rise to be above the rate we've fixed at for 5 years.

Posted 8 months ago #
tonyd - Member

My logic applies only to my circumstances, current appetite for risk, and opinion on where rates are going. My circumstances are that I require a low enough LTV to get a fix that isn't that far off most (currently available) trackers and I have a young family so budgeting is a high priority. Because of the young family my current appetite for risk is low, and I believe rates will rise in the next couple of years, perhaps sharply.

Therefore for me a fix is a safe bet - I know what my outgoings will be and can budget accordingly. Rates only need to rise a percent or so for me to break even on a (current) tracker. If I took a tracker I do not believe that a comparable (to now) fixed rate would be available should rates rise.

I agree that the banks won't fix at a rate lower then where they expect the BoE to be, however as I said before they didn't expect them to go to all time lows (who did?) when they were selling BoE +0.5% trackers a few years ago and they were wrong. Back then my circumstances and appetite for risk were different and I was lucky enough to take a very low rate lifetime tracker. Unfortunately I no longer have that tracker as we sold up and moved (for other reasons).

My point is that our opinions differ largely because our circumstances differ (I expect). We each need to do our own research and make the decision that is right for us.

Posted 8 months ago #
toys19 - Member

I agree that the banks won't fix at a rate lower then where they expect the BoE to be, however as I said before they didn't expect them to go to all time lows (who did?) when they were selling BoE +0.5% trackers a few years ago and they were wrong.

At the time they were selling 0.5% trackers they were also offering 5-7% fixes (2002 was when we got our 0.7% tracker and I still have the paperwork for a 6.75% 3 year fix that I was trying to persuade the wife we should get, base rate was 4%, three years later interest rates were at 4.75%., they peaked at 5.75% in nov 07 at the time banks were pushing 8% fixes, and still offering 0.5% base rate trackers). I don't think they got it wrong at all. But if you agree they wont fix below their predictions I ask the question, why do you think that it will go above the fix and hence make fixing worth while. You are implying that you can out think the banks economists.

It is up to you to draw your own conclusions. Since we got into trackers I have watched this market very closely (for 10 years) and the long term swap rates always do the opposite of the fixed rate market.

Posted 8 months ago #
tonyd - Member

Poppycock

With 0% you could end up pay 120k for something that is worth 100k.

Are you telling me you DONT want your biggest assest rising in price?
Rising in line with inflation? Perhaps. Being used as a speculative vehicle which leads to the pricing out of a lot of the younger generations and sucking money out of the real wealth generating economy? Absolutely not.

As I said I don't really want to derail this thread any further so would rather leave it at that.

Posted 8 months ago #
tonyd - Member

But if you agree they wont fix below their predictions I ask the question, why do you think that it will go above the fix and hence make fixing worth while. You are implying that you can out think the banks economists.
Rates don't need to go above what the banks are fixing at, they just need to go up enough to take a +2% tracker above what I can fix at. For the record I think it's possible that rates will go higher, but that's my opinion. Again, nobody expected rates to drop to all time lows, just because the banks (or Joe homeowner) don't expect them to go up doesn't mean they won't. A fixed rate gives me some security against that, that's all.

Posted 8 months ago #
Ro5ey - Member

You're right.

Socialist flights of fancy are for a completely different thread.

OP good luck and well played for even saving up enough money for a deposit. No mean feat these days.

Especially with bike bling to buy!

Posted 8 months ago #
toys19 - Member

Rates don't need to go above what the banks are fixing at, they just need to go up enough to take a +2% tracker above what I can fix at.

This I can understand, my tracker argument runs out if base rate + bit is too high in the first place..

I wonder if the banks are trying to push us all into the cycle of remortgaging every 3-5 years so they can manipulate the market even more.

Socialist flights of fancy are for a completely different thread.
Don't you mean capitalist?

Posted 8 months ago #
ebygomm - Member

Good point about the risk being different for different people.

For first time buyers for example they may have a choice between:

10% deposit 2 year fixed rate fee free with Natwest - 4.99%
10% deposit 2 year tracker with Natwest +4.09% above base

Posted 8 months ago #
tonyd - Member

I wonder if the banks are trying to push us all into the cycle of remortgaging every 3-5 years so they can manipulate the market even more.
Absolutely, a few years ago they'd pay fees etc. Now people are used to hunting out the best rate every few years you have non refundable admin fees and high booking fees.

I don't think my parents changed their mortgage for the entire term!

Posted 8 months ago #
uplink - Member

I'm lucky enough not to have a mortgage any more but I did have one in the eighties and nineties

We live in very uncertain times especially in the finance side of things, interest rates may well not go up very much at all in the foreseeable but don't write off the possibility of something big happening that could change that
16 September 1992 was an interesting day, the BOE rate started the day at 10%, before lunch it was 12% and then before I'd finished my 2nd pint it was 15% and when I got home it was 12% again, which was where it settled
Politicians and bankers having a disagreement cost everyone very dearly

Not saying that'll happen again, but don't ever think it can't and that rates can't skyrocket very quickly indeed

Posted 8 months ago #
toys19 - Member

10% deposit 2 year fixed rate fee free with Natwest - 4.99%
10% deposit 2 year tracker with Natwest +4.09% above base

There is no point getting a 2 year tracker. I'm talking about a lifetime tracker.

Posted 8 months ago #
ChrisE - Member

Took out a First Direct (HSBC) mortgage 3 years ago. Tracker, offset against our bank accounts, flexible (you can under or over-pay, you can leave at any time) and at 0.49% above base. So why would you fix? I think they still offer the same but at about 2% or something above base.

if you worry about rates going to 8% in 5 years, think first what will I have saved before then and banked and also if base rate goes to 8%, mortgages will be 12+% and basically everyone else will be f&%ked anyway so you're the least to worry

C

Posted 8 months ago #