Anyone got any inside knowledge on what is expected to happen with interest rates over the next 5 years?

On the verge of taking on a Fixed rate mortgage for 5 yrs at 5.39% but my Varible is only at 4% (Nationwide SVR)..

I need to borrow some more (£25k) to pay off some debts I picked up when my wife's business went bust but I can get that @ 4% too or as part of the above remotgage…

Report today said rates should stay low until 2014, but only a 1.4% increase in rates will negate any benefit of staying on the SVR

So do I stick with a SVR or go for Fixed???

Or put my head in the sand and ride my bike instead?

They can only go one way

Nobody really knows when or how high they'll go – flip a coin?

Base rate is currently 0.5%, the reason you're being offered 5.39% fixed is because the bank has no f*cking idea what's going to happen over the next five years. It's therefore not taking any risks.

Ironically, as the economy starts to come back the base rate may rise but the fixed rates may come down as the banks become more confident about what the economy is doing.

I'd whack it on the SVR, but then it's not my money. For the increased cost of the Fixed you're buying certainty (and you always pay a premium for that).

Is now the time to add that I'm paying 1.35% on my tracker? 🙂

i've just come off a tracker with nationwide onto the SVR (i thought it was anyway) and i'm paying 2.5%.

they have been trying to get me to sign up to another tracker or fixed deal, that'll be significantly more expensive monthly and I'd have to pay an arrangement fee of £999.

think i'll sit on the SVR rate for now, one month in and its already saved me £1250…

I took out a 10 year fixed at 4.79% about 15 months ago.

As IHN said, you pay for the certainty

We're in the (almost) same boat. Part of our mortgage will finish early next year so both halves will be on SVR. Our problem is the deals that are out there are unlikely to help as we only have circa 20% equity (possibly less-depending on market valuation etc)

SVR looks the best deal at the moment IMHO

If interest rates rise, I reckon this would re-ignite the mortgage market and see the return of some of the deals we saw pre-recession. Swings and roundabouts. I'm going to hold on to the SVR and wait and see. Either way its a gamble

I think it is a case of swings and roundabout as any savings taken now with a SVR could be wipped out when rates rise.

There are very few fixed rate offers at the moment as interest rates are so low. Go with the SVR as you will not be locked into this rate. Mortgage rates will not rise until the market starts to recover, by which time there will probably be more fixed rate offers on the go. You can then switch to a fixed rate at any time without penalty when the SVR becomes too expensive.

im in a similar postition to wombat. im happy where i am dont intend moving and had my mortgage fixed at 4.29% for 15 years last year just before/as the banks started to go tits up. it may be the wrong one to be on at the min but its only gonna go up so im happy 😉

plus i got 1500 cashback which i blew on a bike 😉

Read this over the weekend – may help focus your thoughts. Or cloud them further…
CLICKY ME NOW!

Go for variable, economic forecasts show very slow recovery and very low interest rates will be needed to stop inflation rising as a reault of quantitive easing (printing money)

The difference between base rate and the rates offered on the high street is never been so large.

The banks are absolutaly raking it in at the moment, they are doing it to cover the loss of profits from risking inveestments and because they can.

Personally I doubt rates will rise much in the next couple of years, I also think that as the market stabilises and competition returns the gap between what the banks can get money for and what they charge will narrow.

Take that advice like you might a tip on horse race from a bloke down the pub though, its just my opinion.

I'd be tempted to stay with variable as it'll save you a bit of cash over the next few months and you'll still probably be able to get a similar deal to the one you're being offered now after Xmas.

I was going to fix last year in August but missed the rate i wanted (around 4.5% i think) and ended up going onto a lifetime tracker of Base rate plus 0.48%. So my mortgage rate is currently 0.98% – best thing i ever did and am over £500 better off every month now and can pay way more off the outstanding balance now whilst still having more cash in my pocket. If, as the recent economic outlook report suggests, the base rate stays at 0.5% until 2011 i'll be an extremely happy man. Feel sorry for the savers though who've done nowt wrong and have been hammered.

But…. if you cannot afford the risk that rates will go up sooner than expected and have a family etc depending on you then a fixed rate will offer you peace of mind at least.

There is no right or wrong answer i'm afraid.

I agree with MrTall – I doubt base rates will go up much and if they do start rising a lot you should be able to remortgage then for a fixed rate.

I have always been on a variable rate and never regretted it.

I suppose it is a question of how much will fixed rates go up by if I wait. My broker told me 3 months ago the rate was being pulled by the company and I had to submit my app urgently but looking now they still have the same deal on the website!! What's going on there???

What's going on there???

Commissions, targets and the usual sh*t brokers tell you to get you to sign.

Tell me about it, he told me rate were going up dramtically but they've not done that at all!

Nothing ever happens quickly with interest rates

I did have a mortgage then & was bricking it big time
It cost everyone an awful lot of money & it was a long time before we could afford to go out for a drink or a meal again

I don't recall there being the option of fixed deals in those days

I suppose the big factor in this which will hold down rates is the impact on the wider economy when loads of people can't afford their mortgage payments if interest rates go back up to their previous levels.