Interest Rate Rises?

SooSoo_4

Hi all. Can you give me your views please on whether or not you think interest rates will go up or down over the next 2/3 years. I know you haven't got crystall balls (!) but just give me an idea of what you think. I have simply got to make my mind up today whether or not to take an offered Tracker mortgage of +1.6% over BoE or whether to start again and look for a fixed option. Same lender can provide 5.79% fixed for five years.
Please keep it simple - I am not an idiot, but am also not a financial wizard!!

Thanks for any advice you can give.
SooSoo

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[quote=SooSoo;14581845. Same lender can provide 5.79% fixed for five years.



SooSoo[/quote]

That sounds like a good rate, we've just fixed for another 5 years, but for me being able to sleep at night was worth the risk that we may be paying a little too much. I like to know where we stand I think it's personal choice, some people prefer to fix, others prefer trackers etc. We are goind to 'try' and overpay on ours though if we can.

maninthestreet

SooSoo wrote: »

Hi all. Can you give me your views please on whether or not you think interest rates will go up or down over the next 2/3 years. I know you haven't got crystall balls (!) but just give me an idea of what you think. I have simply got to make my mind up today whether or not to take an offered Tracker mortgage of +1.6% over BoE or whether to start again and look for a fixed option. Same lender can provide 5.79% fixed for five years.
Please keep it simple - I am not an idiot, but am also not a financial wizard!!

Thanks for any advice you can give.
SooSoo

The Governor of the Bank of England doesn't even know what interest rates will be in 6 months time. Anything anyone tells you on this forum about interest rates in the future is pure guesswork, and you guess is as good as anyone elses.

hethmar

If you are worried about rises then choose a decent fixed rate so that you can budget accordingly.

sdooley

Boolean logic says that if you don't have any idea of the answer to a problem, you should attribute 50:50 probability to each side.

so 50% chance rates will rise, 50% chance they will fall.

But what we do know about rates is they can rise further (e.g. to 10%+ as in the 70s or 90s) wheras they can only fall to a minimum of the bank's margin (1.6% in your case). So unless you are convinced by anyone here's economic arguments that it is more than 50% likely they will fall, you should get a fixed rate.

Whichever option you choose, check the exit penalties in case you have to sell within the five years.

TighterThanTwoCoatsOfPain

Personally I would fix, but then I'm not a financial risk taker!

The BOE base rate would have to go down to beneath 4.19% before the tracker is as competative. Just a personal opinion, but i reckon the average base rate will not be below this amount.

It also hinges on the size of the mortgage and the remaining term, but if if the fees were similar i would be taking the Fixed...

SooSoo_4

Thanks for all your advice. It is much appreciated.

SooSoo

Rikki

SooSoo wrote: »

Hi all. Can you give me your views please on whether or not you think interest rates will go up or down over the next 2/3 years. I know you haven't got crystall balls (!) but just give me an idea of what you think. I have simply got to make my mind up today whether or not to take an offered Tracker mortgage of +1.6% over BoE or whether to start again and look for a fixed option. Same lender can provide 5.79% fixed for five years.
Please keep it simple - I am not an idiot, but am also not a financial wizard!!

Thanks for any advice you can give.
SooSoo

If you would feel better knowing what your monthly mortgage payment is going to be each month then fix. It would certainly take away any worry about potential interest rises over the next few years.

It depends whether you want to look at it as a form of security or looking at taking a risk and maybe saving money.

If the rate rises could you cope financially?

Its how you feel safest.

SooSoo_4

Hi Rikki,

Yes I could afford several increases in rate rises but like everyone I do not like paying "over the odds" if this is not necessary.

Thanks, SooSoo

2latenow

SooSoo wrote: »

Hi Rikki,

Yes I could afford several increases in rate rises but like everyone I do not like paying "over the odds" if this is not necessary.

Thanks, SooSoo

If you go for the fix, read up carefully on the exit / early repayment charges for the fixed rate and know for each year of the fix what the exit cost you be. Then you can calculate how low rates would have to go for it to be worth paying the ERC and moving.

teedy23

I,m in much the same position as SooSoo, although I have 3 months untill I REALLY must decide. My current provider, I,m JUST off the phone, has offered me 5yrs fixed at 5.84 with an arrangement fee of 999. I dont have a thousand to throw at them so this would have to go into my mortgage. This would make my payments £25.00 a month more. I know it doesnt seem like much. Going on to the variable rate takes them up £33.00, but I would like the security as I,m on my own. Does this sound like a fair rate to you folks, I,m so scared of making the wrong choice.