[Closed] fixed rate mortgage

I've not looked at current deals but I've been with Nationwide ever since buying my first house and they've always been very good for me.

YMMV, etc.

Nationwide here too. Can't fault them.

friends have just bought, and decided to bypass the fixed thing - they don't see interest rates going anywhere for a while- a tracker mortgage through John Charcol at 2.2% above base for life, 2 year tie in, no application fee aside from Charcols fixed fee. Can't remember which bank though - either Birmingham Midshire or Halifax.

I am really against fixed rates, you are essentially gambling against the bank over what will happen with interest rates. You have to ask yourself, are you smarter than the banks economists such that you can predict interest rates over the next 5 years, to know that this is a good deal?

You always know when the banks think interest rates are likely to fall, they start talking about rises and risk and offering "really good" fixed rates.

The other problem with fixes is the fees strucures, you pay a fee now and in 5 years when your deal ends the bank has you by the short and curlies as their reversionary rate is likely to be awful so you have no choice but to go on another "deal" with a fee.

Can you not find a decent lifetime tracker?

Edit see vinneyh above. Looks good.

As above, I have fixed in the past for 2 terms of 2 years. after each is up and I work out the interest paid of the alternative tracker preoduct I have paid more money.

Agree, we fixed a few years ago but it hasn't been cost effective. Knowing our monthly outgoings has made budgeting easier but having more money would have been nicer 🙂

dglover - in gambling the house always wins - in this case the bank.
I'll be honest I was naive when getting into mortgages etc. I was all up for fixed but my wife who had worked for the banks in previous life showed my the wise ways. She worked in a mortgage dept as support to the guys who set the rates, and understood exactly how the banks set you up and rip you off. V glad I listened as we have done very well by having trackers.

[quote=toys19]I am really against fixed rates, you are essentially gambling against the bank over what will happen with interest rates. You have to ask yourself, are you smarter than the banks economists such that you can predict interest rates over the next 5 years, to know that this is a good deal?

But are you not gambling with what will happen to interest rates with a variable mortgage also? At least with a fixed rate you can limit your exposure to the risk of rates rising, knowing that what you pay in 3 years will be the same as what you are paying now...

I'm not saying that one is better than the other, just that neither are sure things..

I'd avoid fixed at the moment - like was said, interest rates aren't going anywhere for a while. Just get on a product you can jump ship to a fixed if needed and keep a careful eye on the market. The money you'll save over a 1-2 year period will be well worth the effort.

We're on fixed right now, as we bought first house last year and didn't have a choice - was hard enough getting the 10% deposit together, and then to be hammered on monthly payment with a fixed rate was a real kick in the teeth.

We were on a fixed rate for the last 5 years ... no we've come off the rate, the monthly amount has dropped considerably ... we were definitely worse off staying on the fixed rate. Its to the point that we borrowed a fair amount again to do a house extension, and now we've dropped off the fixed rate, the mortage is almost the same as it was before, even with the extra borrowing on it.

I think i'll be sticking to the tracker type for the near future at the moment.

Also look at the 'get out' charges if you're determined to go on fixed rate. 5 years is a long time to be locked in... may cost your £1000's if you need to get out early.

The last couple of years has been a realy bad time to be on a fix. The out look is that this will continue. Get on a low tracker as above.

Not that well up on mortgages I have been on a tracker for last 10 years so might stick with it ,although my Halifax tracker seems expensive compared just never get round to changing it

It does seem a bit scary to go variable/tracker at first but I don't want to lose mine now.

I've gone from 4.38% fixed for 2 years to an painful 5.75% fixed for 2 years which then went to a 1.2% above base rate which I am not swapping for anything and have been enjoying for the last 2 years!

I do sit here praying for no change in the interest rates every month though.

oh and I think the best I have seen around at the moment is about 2% above base. Possibly First Direct.

Isn't it really hard to get a tracker mortgage as a first time buyer with 10-15% deposit at the moment?

But are you not gambling with what will happen to interest rates with a variable mortgage also? At least with a fixed rate you can limit your exposure to the risk of rates rising, knowing that what you pay in 3 years will be the same as what you are paying now...

I'm not saying that one is better than the other, just that neither are sure things..

Is knowing exactly what you have to pay worth so much to you? The sure thing with the fixed is that the bank will make lots of money from you.
Why not take a tracker, but save the amount you would have to pay for the fixed deal for 'if' things go bad. The bank make money from your emotional response to having to pay a variable rate.
If you fix you are gambling with the bank, and interest rates. If you track you just gamble with interest rates.

I'm no economist but I do not see interest rates going up any time soon, and I'm no politician but I cannot see any govmt in the next 20 years presiding over the kind of interest rate rises we had in the late 80'2 early nineties.

Life Time tracker is the way to go unless you are on a really tight budget and need to know exactly how much you have going out every month and don't mind paying for the privilege.
A mortgage is a loan with a 25 year term so why do people take 2 year deals and then pay more fees to take out another one and another one? You may beat the banks a couple of times over the 25 years but not for the whole time.
With a tracker you know how much you are paying over base rate and are not in the position where the lender can change your rate over base rate as they see fit.
Deals are not as good as they were 5 years ago when you could get base plus 0.5% but there are deals around plus 2%.

Isn't it really hard to get a tracker mortgage as a first time buyer with 10-15% deposit at the moment?

HSBC had no problem agreeing on principle a tracker mortgage with a 10% deposit. Managed to get a 15% deposit in the end though, it's all been approved now. \o/

On the basis interest rates can only go up from where they are you should budget for increases in base rate over the next couple of years. Make some savings now while rates are low.

I saved loads on trackers over the years, just finished a a 3 year deal with Nationwide on a tracker -.07% off bank of England base rate.
Looking to move house now, so need to find another deal though don't imagine I'll get another one like that. Been a good 3 years though.

Great article [url= http://www.thisismoney.co.uk/money/news/article-1607881/Interest-rates-News-predictions.html ]here[/url] and some good links, like this [url= http://www.thisismoney.co.uk/money/news/article-1692264/Keep-an-open-mind-on-0-interest-rates.html ]economist[/url] arguing for 0% base rate. How nice would it be to have tracker if it went to 0%..

RV is that 0.07 below base rate? Making my 1.2% above feel like a rip off!

If it went to 0% would they give you money each month? 😀

yes that was below but they had a floor to the rate so as to stop them having to give me money. Now it's run out I'm surfing a discounted variable rate for the time being but now i'm going to do a big move and have to find a new deal as I'm sure they won't honor where I am at the moment.

"How nice would it be to have tracker if it went to 0%.. "

Pretty sh1te actually.... as it would probably mean you'll be losing more money on the value of your house than the savings from the % payments.

Well if you expect to make any money out of house price rises then more fool you, I would like to get my mortgage paid off and be taken out of my house in a box.

You're gambling either way, it just depends on your appetite for risk. A fixed rate is (IMO) the less risky in that you know what you'll be paying over the next X years. A tracker is higher risk IMO as while rates may be low now, if they rise sharply there might not be a decent fixed rate to swap to.

The banks pay lots of money to some (apparently!) very clever people to calculate the risk to them and they price their products accordingly, but they're certainly not infallible. If they were they wouldn't have been throwing money out the door at BoE base rate +0.5% as they're paying for that now. Well actually, everyone else is but that's another thread 🙂

Boring I know, but my advice would be speak to an independent whole of market financial advisor, he/she can look at your particular circumstances and make recommendations. Don't try to second guess the banks or the BoE rate setting committee, just do what is the most suitable for your circumstances.

If it was me, I'd go for a 5 year fix as they're looking relatively cheap now. A 2% + spread on a tracker might seem cheap now but if rates do go up to the historical average of something like 5% you'll be paying 7% +.

As I said, an IFA will go through all of this with you, any savings you may or may not make will depend on the amount you're borrowing, deposit, etc. Bottom line only you can decide what's right and while the STW massive is a wise and all knowing collective you shouldn't be basing the next 25 years of your life on what we say 🙂

I have a base rate tracker+0.98% is that good. 😀 😉

You're gambling either way, it just depends on your appetite for risk. ..... The banks pay lots of money to some (apparently!) very clever people to calculate the risk to them and they price their products accordingly, but they're certainly not infallible

Whilst they are not infallible, I'll bet they are better at it than you or me.

Well if you expect to make any money out of house price rises then more fool you, I would like to get my mortgage paid off and be taken out of my house in a box.

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

I have always used an independent, whole of market mortgage advisor. I over analyse and worry about everything. He narrows down the options, explains them in black and white and sorts out any problems. As I was a student he didn't take a fee (just the commission) but next property I will continue to use him and I have recommended him to family and friends.

Whilst they are not infallible, I'll bet they are better at it than you or me.

oys19 - Member
[i]You're gambling either way, it just depends on your appetite for risk. ..... The banks pay lots of money to some (apparently!) very clever people to calculate the risk to them and they price their products accordingly, but they're certainly not infallible[/i]
Whilst they are not infallible, I'll bet they are better at it than you or me.

But 'they' have to consider every situation from a 1 bed in London to an ex-council house in Birmingham were as you have to just consider your home and your circumstances in the economy - current and future so you have a good chance of getting it reasonably right with enough research.

So that's that all sorted then, clear as the proverbial mud, I have a 12:30 appointment for mortgage advice so i'll see what I come away from that with.

My current school of thought is to just close my eyes and randomly choose one - I seriously doubt I'd be any worse off, its a very confusing marketplace.

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.

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.

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.

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

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.

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? 🙂

toys19 - Member
For me it was luck that my [b]wife[/b] had good judgement.

Maybe she's learnt from a previous major mistake? 😉 😆

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?

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.

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.

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).