Applied for Fixed rate but solicitor says dont as rates will go down by next yr??

We spoke to our broker and he said a lot of people are taking tracker mortgages for that reason. i don't think we would take a fixed rate yet as B of E is probably going to hold rates next time and then we'll decide. We don't have to decide till December so maybe things will be more certain by then.

PrincessJR wrote: »

Hi,
We have had a mortgage offer in principal, and have filled in the forms, sent of docs, and are just waiting for the 'ok'. I went to see our solicitor y'day and he said ' whatever you do dont go for a fixed rate mortgage'. I told him we had as we are first time buyers and feel its safer, but he said, there is no way the interest rates will go up as everyone would be bankrupt, so the only way for them to go is down. He reckons by this time next year, they will have dropped and we wont benefit from it if we are on a fixed rate.

What should we do?

How long will you be locked in for? As long as it's not too long (couple of years , say) I'd have thought for FTBs, the stability is worth having at the start, even if you might miss out on a saving if (when) rates fall.

I'd agree with the solicitor's view that rates have probably peaked now, but IMHO that is more likely to lead to a period of "no change", rather than a fall. The reason is that inflation, though now dipping, needs to demonstrate that this is sustainable longer term.

In addition although some of the steam is leaving the property market, there are stimuli in the pipeline - eg a potential shortage of property due to HIPs. The bank will also be aware that last time it cut rates, the effect was to ignite the London property market, which remains strong.On the other hand, if the stockmarket turmoil affects City bonuses badly, that could dampen demand a bit.And if the market turmoil affects the real economy, the Bank certinaly wouldn't want to make things worse by raising rates.

Basically the outlook is quite uncertain, which suggests a policy of no change is appropriate to allow things to settle down and to ait for cleaer indicators of trends: thus IMHO it's unlikely you will miss out on much of a saving in the next couple of years if you fix and you will have valuable peace of mind.

There's an advert at Peterborough train station from Norwich BS advertising their fixed rate mortgages, along the lines of "protect yourself from BoE rate rises, fix with us now". This tells me rates are going down next year.



Have you thought about a capped rate mortgage? Or a discount tracker where it's cheap to exit/port? I would be wary about fixing right now at what is likely to be the top of the market.

Are BoE rates still relevent though - most of the cheap deals seem to have been funded outside the UK.

Always the chance that el BankO will abandon any semblence of control to keep the "miracle economy" going until another election has passed - unfortunately that may well make the current collapse look like "the good old days" in a couple of years.

See what banks are charging for long term (5-10 yr) fixed rate.
During that time period, the average base rate will be lower than at least 1-2% than that!