I know its been done a million times on here and I should be flogged but...
Just had a call from the wife had a letter from the bank (who has a blue cross for it's logo) our 5 year fixed is up which was £572.00 a month they are going to automatically put us onto SVR @ £444.00 a month.
The wife wants to go with this and save the £128.00 for a rainy day but i want to fix again as im mr paranoid and like to know for the next x amount of years it's well... fixed?
my argument is, if the rates shoot up we'll be screwed eitherway.
I know it's stick your finger in the air but what would you do?
I'd go to the SVR (and just have as my 5yr fixed just finished) but I'm going to keep up the old payment and start making some gorund on paying the mortgage of early. Just keep a eye on rates nothing will happen over night and you'll probably find as I did you won't get a deal anywhere near has good as when you fixed 5yrs agon so will end up paying more than you already do!
I'm going to keep up the old payment and start making some gorund on paying the mortgage of early.
That's what I'd do. Then, when you do remotgage, knock a year or two off years off the repayment term
Personally I'd be tempted to fix again even if it costs you more in the short term. Bank of England base rates are at an all time low and yet most SVRs are 3% or more above that. If rates go up (as I believe they must but that's another conversation) and the banks keep that same spread you could get a nasty surprise.
The long term average base rate is something like 6% I think. Also, don't forget that the banks SVR is subject to any whim they may have so could go up (or down) substantially overnight.
IMO times are too uncertain to leave yourself open to the whims of the banksters, bad enough owing them huge amounts of money without having them move the goalposts when ever they wish.
we've also gone with SVR as nowhere was offering a fixed rate that looked even remotely sensible. Your concern is understandable, but keep it in perspective - if the interest rates shoot up by 1 or 2 percent over a 6 month period, the economy will be shagged and we'll probably all be eating rats cooked over open fires and fighting off rival clans from what used to be the next village.
I gambled on a tracker (and now SVR) with Nationwide three years ago. Its saved me over ten thousand and really helped to get my finances in order. As a result I've got a bit of slack now to absorb any increases.
Interest rates won't go anywhere fast and I refuse to pay an arrangement fee to fix a higher interest rate than I'm paying now.
I think this thread will definitely out the gamblers...
SVR + use the saved cash to overpay. Pointless saving seriously with such crap interest rates when you have a golden opportunity to reduce your debts.
fixed deals are only worth it if you have 40%ish equity in the house.
IMo of course.
agree that the base rate wont go anywhere quickly too, although its a fair point about the lenders doing a fast one overnight..
probably depends what new fixes are on offer?
I'm with natwest and their SVR is 4%, but I could fix for 5 years at 5%. for me the chance of the base rate averaging 1% or less over the next 5 years was pretty slim, so I took the fix. If I'd had a decent deposit I could have fixed for even less. other banks have much lower SVRs which obviously tips the balance in a different direction
fwiw, I recon base rates will stay as they are till mid next year, then edge slowly upwards
Better to pay off early than save surely.
Having said which we fixed the tail end of our mortgage at 4.69% over 10 years some months ago. Insurance really. Rates will go up.
indcidentally, swap rates are here
http://www.swap-rates.com/UKSwap_extended.html
this is basically the rate your bank will pay to borrow money in bulk from another bank. You should normally expect to pay around 1% over this on a mortgage (aka the spread).
historically, swap rates sit a little higher than the boe rate (maybe .5% or so) - the 2 year swap is around 1.5% - so that means over the next 2 years, the banks expect the boe rate to average around 1%. The 5 year swap is currently around 2.5%, so the banks are looking at an average boe rate of 2% - maybe 6 months at 0.5%, a year at 1%, a year at 1.5%, a year at 2.5%, a year at 3% then 6 months at 3.5%?
they probably know more than the average forum poster (me in cluded) but then banks have been wrong before 🙂
Depends if you can afford to make repayments if interest rates rise to a higher level / what level you are comfortable with. Mostly you win by not fixing, occasionally you lose your house....