MegaSack DRAW - This year's winner is user - rgwb
We will be in touch
My mortgage is due to run out of its fixed term in January and drop back to the basic tracker that was the deal when we signed up. Thing is, it's a pretty good deal: 1% over BoE rate. The bank doesn't offer anywhere near this kind of deal with current trackers, and they seem rather keen to get us to sign up to one of their new mortgages. My first thought is that ain't going to happen - our mortgage payments drop by about 40% in February assuming the BoE rate stays the same. Thing is, I don't want to take an unnecessary risk if the BoE rate is due to sky-rocket.
Any mortgage/finance bods got a rough idea of what's likely to be happening in the next year or so?
Um. Got a crystal ball?
Realistically the rate has to go up at some point and sooner rather than later, however any significant increase would hurt the recovery. Reckon it will have gone up a few % by the end of 2011.
I'm also on a 1% over base rate at the moment. Saving a serious packet as had been paying 7% ish fixed. I sticking with a variable deal. Borrowing rates are not cheap compared to low base rate so I'm holding out.
Depends how tight your finances are and if you can afford to gamble a bit....
I would run with it, looking at current rates a margin of 1% gives you a fair bit to play with in comparison with what else is on the market.
Even if rates do rise it'll be years before they're back up to a proper level - 5+%.
TFO - It is all crystal ball stuff and even those of us in the industry can't say with any certainty when BBR is going to go up or how quickly. If you'll be going to 1% above BBR then i would take it as you can't get cheaper at the moment but keep in mind that at some point you are going to have to pay more than that.
Fixed rates do not directly follow BBR so it might be that even if bank base rate goes up you will find some cheap fixed rates about, but then again you might not.
The long & short of it is if you want to know what your mortgage payments will be for the next 2,3,4 or 5 years then take a fixed rate but if you just want the cheapest payments possible and are happy to keep an eye on whats happening then take the tracker variable rate but be prepared for your payments to go up at some point in 2011.
We are resourcing up for a base rate change on the 1st or 2nd Thursday in May. Obviously no one has a crystal ball but if we have just signed off recruiting 65 extra heads by March then someone must have a good idea. I've been working on the 'SVR bubble bursting' project since March and it's doing my head in 😡
(Im the operations manager who looks after Mortgages and General Insurance for the uk's second largest mortgage lender & I hope it doesn't go up next year as i'm not prepared yet!)
I'm on variable, I'll change when the first rate increase happens - means I'll lose out on some of the deals available now (not that they're particularly good) but shouldn't be any worse off really as I'm saving money atm.
Go to the variable but save the money difference between your current payment & a new (lower) payment, and maybe make over payments on the tracker mortgage. Once rates start to increase then head for a fixed, they'll start to creep up by 1/4 or 1/2% increments unless things go really tits up.
My mortgage defaulted from a fixed rate to the base rate +1% just over 2 years ago. Ive been saving the difference and so far have just short of £9000. If rates go up, and I miss the best deals by not being quick off the mark to re-fix, theres still no way i'm going to be 9 grand down. Its an absolute no brainer for me. Stick with the 1% + BoE rate and save the diffrence, pay a lump of your mortgage with the savings, and pay intrest on a smaller amount in years to come.
If you want some free no obligation help my email is in my profile...
I think there are some good fixed deals about at the moment.
You can get 5 year fixed for less then 4%.
If your paying 1.5% now and if % rates stayed like that for the next 5 year ... they defo will not be doing that... on a 100k mortage and with pigeon maths you'd pay 12500k extra over 5 years taking out the fix mortage.
That seem a price worth paying to me.... we are in very uncertain times.
HSBC are doing a lifetime tracker, base rate plus 1.89% with a small £99 aplication fee at the moment, max. LTV 60%.
Muppets to deal with mind.. 😉
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not an mortgage expert btw, I have no idea which way things will go.
Having gone with a fixed rate 18 months ago I'd consider risking a variable - it does look like rates aren't going to rise (dammit).
I'm going tracker, I fixed for the first time 2 years ago and it was a mistake. Historically trackers offer better value for money if you can cope with the peaks and troughs
I can understand why the guys who fixed about two year ago now want to go tracker or variable.
But the very reason why the fixed deals didn't work in the last two years may very well be same reason why trackers wont work now.
The financial meltdown and it ramifications are not over. We do not know what the effects of 0.5% interest rates and QE will do to inflation.
In a few years time the base rate could easily be 5% and here's the thing I'm somewhat worried about... no one offering competitive mortgages... you might not be able to get a mortgage at less than 2% above base.
LOL as I speak Bank of England warns of increased inflation risks
Why save the money when rates are low? Overpay instead and pay the loan off instead! My tracker rate ends in April and with the overpaying I've done, I reckon I should be able to clear the mortgage in 6 years 😀 I really, really look forward to that day
Yes I am currently on a BOE +.2% tracker so have been paying off 3 times the miniumn ammonut just to shift it. Plus if the rates to do rise i will nbot have to pay out any more a month.
Ta for the answers. I understand it's all witchcraft and voodoo trying to second-guess the BoE.
The general idea is that when we go down to BoE+1% then we'll continue to pay the same amount as we do now and knock a fair bit off our mortgage in the process. As has been mentioned above, this seems to be the most sensible option for now.
Fixing is just betting, go with the variable and you can jump ship when/if someone has a better deal.
Lifetime tracker, 0.35% over BoE 😆
Get yourself a kid (or kids), that'll pretty much cement the option to go for lowest monetary payback that you can get away with! 😉
The wee lass that calls you SOX! has spoken (via the medium of my fingers!)
Fixing is just betting
Were you a Law Lord in 1989? Fixing is no more betting than keeping it floating, it is just it is a relatively recent innovation. In Continental Europe fixed mortgages are the norm and floaters are the innovation - no doubt you would regard floating at a bet if you lived there.