mortgage rates coming down....what to do.

manikm

I've noticed that in the last month since ive been having to look for the best remortgage deal (as my deal runs out 1st Oct) i've noticed the rates have come down quite a bit.

I beleive this is something the BOE have agreed with lenders or something - and is ending at the end of october.

Quote from bbc: "The Bank of England intervened in April with its special liquidity scheme which allowed banks to swap £50bn of mortgages for government bonds. That swap scheme is set to end in October, but the Council of Mortgage Lenders (CML) has called on Chancellor Alistair Darling to
announce an extension or renewal to counter market uncertainty."

So when i was looking at the beginning of August i was looking at 6.69% to stay with RBS (and i was also looking at a Nationwide deal at 6.58% on a 5 yr fixed) which wasnt great seeing that my deal ending is at 5% base rate.

Now, its a different story and in just 1 month!! that 6.69% is now 6.24% or 6.09% for a tracker.

My FA today told me today he could get me a 5.89% on a 10 year fixed, and i'm in the 90% LTV bracket!!

Now, would you\should i jump on one of these rates? or is it worth considering falling over to the extortionate SVR with RBS at 7.19% and see how it goes for a month or two? and then maybe decide?

Do u think rates (interest or mortgage rates) will come down MORE to try and kick start more first time buyers into buying?

I'd be happy with a 5.5% deal with a £600 fee - but is that asking too much for an 90% LTV man? LOL!

Its certainly a minefield !!!!

Answers on a postcard

dwsjarcmcd

Swap rates have fallen, and there will be reduced fixed rates launched next week, little doubt. Whether they get to 5.5% at 90%, I can't say but the other issue you have is unless you stay with your current lender, your running out of time to remortgage

manikm

yeah but dropping into the SVR gives me more time...

dwsjarcmcd

yeah but they can just as eaily go straight back up again! There is absolutely no guarentee that they will continue to fall, in fact in these economic conditions, it is probable they will move all over the place.

dimbo61

A 10 year fix at 5.89% gives you long term security and the time to clear a lot off your mortgage.
The next time you are looking for a mortgage ten years down the line the amount of equity you have in your mortgage should be over 50%.
If you overpay even by 10% a year you wont need another mortgage !!
A rate at under 6% is very good in the present climate.

dimbo61

sorry should have said the amount of equity in your HOME should be over 50%.
Just one set of remortgage fees and you could be mortgage free in 10 years.

manikm

dimbo thanks for that!!

i think 5.89 is a great rate especially for me at 90% LTV - but i keep hearing about fixed rates coming down even more soon ....so i just dont know whether to wait and ride onto SVR or go for it now!! mind u - even if i did go for it MOnday say, will it go through by 1st Oct? not sure how long it all takes...

gil13

I guess it is a calculated risk to move onto SVR for a few months, suppose it depends on how much £££ we are talking about, can you live with the difference for 6-12 months. I suspect going by the 10 yr swap rate there will indeed be some decent 10 yr fixes turning up. FD have pulled their current 10yr, I reckon that will come back cheaper when/if they come back to market. But the markets & economies are jittery who really knows what's round the corner, timing it perfectly is almost impossible you just in the end have to weigh the pros/cons and go from there. 10 years for some way too long, for others worth it with the security it brings and no fees and hassles x 5 if you like to go for 2 year fixes... So there is a lot going for longer fixes these days especially now some of the 2 yr table topping fixes come with hefty fees and over those 10 years hopefully salary rises will help.

manikm

lol i dont know why some people think 10 years is too long to fix for, and such a bad thing - i mean, you have to have a mortgage anyway, so why is it sooo bad to fix for 10 years.

after alls said and done, if you've gone from 2 yr tracker, to 5 year fixed to another tracker etc....that adds up to 10 years anyway, but you might have paid about 5K in remortgage fees.

LOL

Mrs_Chicken

5.89% is certainly a good headline rate, but you don't mention the fee - is there one?

One reason that some people think 10 year fixes are "such a bad thing" is if they plan on moving house during that 10 year period.

Even if the product you have chosen is theoretically portable, as most are, if you are moving up the property ladder and wish to increase the size of your mortgage, there is absolutely no guarantee that the lender would be willing to increase their lending to you.

You would have to re-apply and fulfil all of their criteria at that time. If you don't, you would have to pay the usually whopping early redemption charges to get out of the mortgage.

manikm

yeah theres a fee mate - £990 i think

im tempted by my current lenders tracker also at 6.09%