Are fixes likely to fall from here?

freebo_2

Hi,
Like lots of people our fix is coming to an end, even at SVR the repayment is affordable but obviously we want to pay as little as possible. Our LTV is about 70% (assuming a low valuation, or about 53% from peak value), we have a good credit record and our current lender (Nationwide) is offering about 5.88% fixed for two more years with a £299 arrangement fee (its quite a large mortgage so the fee makes little difference).

I know there are no certainties but is the consensus that fixed rates are going up from here?, I'm reading lots about the BoE cutting rates, but I know that these days that doesn't mean the cuts will be reflected in mortgage rates, and of course we're living through incredible times in the financial world.

Also, is 5.88 fixed at 70% LTV for a 2 year fix a reasonable deal these days? We run our own Ltd Co and have more than 3 years of accounts which lenders seem happy with.

Appreciate all opions.

minimike2

SWAPs have been on the up recently, so fixed rate pricing is not likely to come down in the short term.

lisyloo

but I know that these days that doesn't mean the cuts will be reflected in mortgage rates

If you take a BOE tracker then it's a contracted obligation that the mortgage will follow the base rate.

BEFORE you have taken a mortgage then bank can set the rates as they wish.
AFTER you have a mortgage then there is a contract in place and I've not heard of any lenders not keeping their contractual obligations. Obviously if you take an SVR then it can change but if you have a BOE tracker then it tracks the BOE rate and there is no question of that.

freebo_2

lisyloo wrote: »

If you take a BOE tracker then it's a contracted obligation that the mortgage will follow the base rate.

BEFORE you have taken a mortgage then bank can set the rates as they wish.
AFTER you have a mortgage then there is a contract in place and I've not heard of any lenders not keeping their contractual obligations. Obviously if you take an SVR then it can change but if you have a BOE tracker then it tracks the BOE rate and there is no question of that.

Thanks both, yes I understand that fixes/trackers are honored on their origional terms what I was asking is if the BoE cuts the base rate, will this mean that fixed rate mortgages are offered at a lower price, as I suspect not, and not by the amount the base rate gets cut by.

I think the Nationwides tracker with a "switch and fix" option may be the way to go for us.

Cheers,

Mike

lisyloo

what I was asking is if the BoE cuts the base rate, will this mean that fixed rate mortgages are offered at a lower price

No, basically.

Fixes are based on what the banks can borrow money for.
Traditionally there has been a link with the BOE rate, however at the moment that relationship is somewhat broken.
It's affected by sentiment during this credit crunch.
Rates have been yo-yoing around, sometimes going up, sometimes down.
At the moment I think fixes are on the way up.

hostman

I noticed today that Nationwide have increased some of their fixed rate deals. Good job we have a mortgage offer for a cheaper rate from 5 weeks ago.

Its impossible to predict the future movements. I'd want reassurance I can afford current rates, so reserve a rate which you can afford if you can.

dunstonh

Mine is coming up and I am going with a BoE tracker this time round. If we are entering recession then you expect the BoE rate to drop. Fixed rates are rarely linked to that nowadays and are heading in the other direction at the moment.

joAnn

hostman wrote: »

I noticed today that Nationwide have increased some of their fixed rate deals. Good job we have a mortgage offer for a cheaper rate from 5 weeks ago.

Its impossible to predict the future movements. I'd want reassurance I can afford current rates, so reserve a rate which you can afford if you can.

I called NW about 10 days ago to reserve my new mortgage as I was worried the rates would go up. was told by some guy that the rates probably wouldnt go up and that I could def reserve the product I wanted with immediate effect. He went through all the options for me and read all the terms and conditions. I said I would call back once I had considered the products. The guy never made a note of call on my records, although he did send me some paperwork about something else, which apparently NW have no record of. I phoned again on the Saturday planning to reserve my product having considered all the options only to be told I wasnt allowed to reserve it cos of the 3 month rule and was told to call NW on Friday. I called on Friday and hey presto, guess what, interest rates have gone up and massive fees are attached. The letter posted from the 1st guy is my only evidence I spoke with an idiot who promised me something they can't deliver in the first place. I stupidly did not write his name.
Is it best to wait and see if rates drop or the BoE base rate drops - am currently on a tracker. Cant swap lender cos of salary decrease. Can I revert to another tracker or do I have to go with the fixed rate SVR? Someone please offer some advice that I want to hear!!!!

straddie

minimike2 wrote: »

SWAPs have been on the up recently, so fixed rate pricing is not likely to come down in the short term.

They've actually been easing again of late, although yesterday's turmoil on the markets caused them to spike once more. Where from here is anybody's guess - one would assume upwards, but then they could just as easily begin to fall once more.