Mortgage Rates

Discussion in 'OT (OFF Topic) Forums' started by Whitey, Apr 18, 2014.

  1. Whitey

    Whitey Hardcore MB Enthusiast

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    Guys

    Just going through the process of renewing our mortgage.

    Just wanted to get a general feeling ( without too many figures ) of what you would do.

    I was planning to take out a 3 year fix at 2.49% but the application went awry.

    Current options are now fix for 2 or 5 years or should I take a calculated gamble and go Tracker ?

    My gut feeling is still to fix. But if I went tracker and rates rise gradually I would stand to save some money and have the ability to pay lump sums off ( not that there will be any big ones ).

    Thanks

    Chris
     
  2. Harrythedog

    Harrythedog Hardcore MB Enthusiast

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    I go for fixed every time, you know where you are then. If you can get 5 years at 2.49% I'd take it. The BofE rate has been historically low for a few years now and the only way it'll eventually move is up. House inflation is reported to be on the rise and there's an election next year so it's possible there may be a "governmental correction" after that

    Just my personal thoughts
     
  3. Giantvanman

    Giantvanman Hardcore MB Enthusiast

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    ^^^I am no expert but gut feeling, exactly as above…………..if the rate could be adjusted down, realistically how far would it drop? A tiny amount, I would say, but increases…who knows how far.

    Personally and completely selfishly (and unrealistically), I am hoping for a rate well above 10%. all savings and no mortgage
     
  4. developer

    developer MB Club Veteran

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    You need to keep an eye on product and application fees to work out the overall picture.
     
    Last edited: Apr 18, 2014
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  5. OP
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    Whitey

    Whitey Hardcore MB Enthusiast

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    Thanks for the input.

    5 year deal is ~3%
     
  6. kinaero

    kinaero Hardcore MB Enthusiast

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    I'd go for offset mortgage with a little overpayment on top, it will dramatically brings down your overall interest rate! And cut short your repayment period :thumb:
     
  7. ioweddie

    ioweddie Hardcore MB Enthusiast

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    I would fix it I were you. I remember when interest rates were so high people were handing back the keys and walking, I am selfishly looking for higher rates as also no mortgage but savings earning zilch.
     
  8. kinaero

    kinaero Hardcore MB Enthusiast

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    Agreed! A product fee can be as much as £2k I've seen, depending on the amount you are borrowing, it may be cheaper to go 2 years fixed.

    There are loads of online mortgage calculators, use it to work out which deal is best for you :thumb:

    Unless of course you wanted peace of mind for the next 5 years.
     
  9. V12

    V12 MB Club Veteran

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    We remortgaged and went 5 year fixed.

    As developer stated, the other fees killed the attractiveness of some deals once we calculated exactly what we would pay over the duration.

    The rate wasn't the lowest (3.09%) but there were no fees at all on top and we have the facility for a £500 overpayment every month which is doing well at eating away at the debt.
     
  10. bas358

    bas358 New Member

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    When looking or comparing the quote (illustration) should show you the cost over the fixed period. Use this to compare with other deals not the cost over the full term as you are likely to change to another deal at the end of a fixed or discounted deal.

    I would go fixed as there is a good chance interest rates will increase with all the positive news about the uk economy.

    Sent from my iPhone using MBClub UK
     
  11. OP
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    Whitey

    Whitey Hardcore MB Enthusiast

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    I randomly got a text message from Virgin regarding previous application saying that the paperwork is due next week ?

    Although confused, I hope it comes through -

    3 years 2.49% fixed No fee iirc.

    As well as fixing I am hopefully going to be able to knock a few years off the term as well. Got to find a balance that works.

    It is a rather large mortgage at the moment. If it was below £100k and sort of more affordable, then taking a chance on tracker/offset maybe a better option.

    Thanks again

    Chris
     
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  12. John

    John MB Club Veteran

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    We're all reading tea leaves when it comes to raising interest rates but my tea leaves tell me that they will stay low for a while yet.

    I don't believe the BoE will want to stifle any recovery at this stage.

    My guess is when a number of factors occurs such as increased inflation, much lower unemployment and so on.
     
  13. renault12ts

    renault12ts MB Club Veteran

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    The base rate will rise next year...but very slowly.
     
  14. theogeor

    theogeor Hardcore MB Enthusiast

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    And unlikely before the general elections or soon after them so we are looking late summer early autumn 2015. That is my prediction

    Theo
     
  15. OP
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    Whitey

    Whitey Hardcore MB Enthusiast

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    ^ that said, how much do you think it will rise ?

    If 0.5 % I will end up at 2.5% anyway, so may as well fix ?

    Chris
     
  16. renault12ts

    renault12ts MB Club Veteran

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    My prediction is January /February...unless the BoE is leant upon by the Govt. Unemployment will get to 7% before Christmas, which is when Carney said rates would start to rise...but they have back pedaled since making that statement last summer...so expect it after Christmas.
     
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  17. theogeor

    theogeor Hardcore MB Enthusiast

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    The rise when it happens (see other comments) will start as a 0.25 and upon marker reaction decisions will be made how quickly and when it will go further up. I don't expect total increase of more than 2% points by end of 2016 beginning of 2017 but never say never as a lot of factors can change that. While inflation stays manageable increases will be small and incremental.
    Now on the question about fixed mortgage or not it all depends what deal you currently have. I am on an offset tracker with 0.48 above the base rate and would be madness to go on a fixed. You will need to do your whole TCO of your mortgage over the 3 -5 year period. However this is risky if you are not discipline enough and you cannot plan ahead if monthly payments go up.

    Theo
     
  18. OP
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    Whitey

    Whitey Hardcore MB Enthusiast

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    Mine will be changing to ~4.6% variable. So have to do something !

    I'm in no position to get an offset mortgage unfortunetaly.
     
    Last edited: Apr 20, 2014
  19. Dieselman

    Dieselman Banned

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    Mrs DM and I once took a Mortgage out at 9.8% as it was cheap. By the time we moved in the rate had risen to 16.25%, then settled back to 12.5%.

    That was the same year I received an unpaid tax notice due to my employer not declaring my company car.
     
  20. cinek

    cinek Hardcore MB Enthusiast

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    Because when it rains, it pours...
     
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