interest rates cut-sick as a parott!!!

panic_2

I have unfortunatly fixed my mortgage rate at 5.84% for 3 yrs only in the last few weeks,not opting for a tracker because i was unsure whether interest rates would rise to curb inflation or fall to boost the economy. Now that it has fallen i think that i may have made the wrong choice.What are the chances of the interest rates rising over the next 3 yrs?

Locoblade

Are you asking about the possibility of rate rises because you're considering paying ERC and changing to a tracker immediately, or do you just want rates to rise so you don't feel so bad?

Now you're on the fix though, whether it rises or falls, at least you don't need to worry about it and you know you can afford your monthly payments.

panic_2

i think its the latter because right now i feel sick,if the BOE BR goes down and stays at 3% for 3yrs i will have overpayed by about £7,000. are we on a downward spiral of rates now?is there any chance that they will rise above 5% in the comming years,what would make this happen?

inca_2

Personally I have no idea what rates will do over the next few months or years but i do know how you feel. We chose a fixed rate over a tracker and the rate has dropped by 0.75% since, not including todays cut. I just see it that we paid for the peace of mind that we have a mortgage we can afford no matter what the base rate does. It's annoying in hindsight but nothing we can do and we can afford the mortgage we have which ultimately is all that really matters.

tomstickland

I took a 3 year fix a few months ago when mortgage rates were at a high. I'm on 6.3%, but it was the best of a bad bunch and involved minimal fees.
In the end I just had to get on with it, at least I know what I'm paying for 3 years.

Treadmill

I fixed for 5 years @ 5.99 in 1998 and saw the base rate fall to 3.5% in that time. I fixed for 10 years last month @ 5.99% and reckon now that the base rate will go to 3.5% or lower... Twice bitten I guess. But I'm happy enough knowing that I can afford my mortgage regardless of what happens to the base rate. Don't beat yourself up about it

JayZed

Quite right, no point in beating yourself up about fixing. You made the decision to go with certainty rather than uncertainty - okay, now rates are going down, but that doesn't mean you made the wrong decision: you decided you wanted certainty and you still have that certainty.

Besides, think of it this way: deciding to fix and then watching rates go down is annoying, but it's not half as bad as taking a tracker and then watching rates shoot up. At least you can (presumably) afford the rate you've decided to pay.

tomstickland

You could think of in terms of renting. The landlord gives you a choice. Say you pay £400 per month on your rent and he says "do you want to fix it at £450 for the next 3 years or let me change it up or down whenever I feel like it?"

panic_2

this is my first mortgage,i know that im gonna make mistakes over the 25 yrs term, but it still dont feel too good, i know that being on a fixed does mean that i can afford it every month but it would just have been nice to save a bit more money each month (£150ish if rates dropped to 3% over 3yrs being on a tracker) and to make the right choice.spose only time will tell,thank-you

panic_2

very good analogies

Ian_Griffiths_Halifax

panic wrote: »

I have unfortunatly fixed my mortgage rate at 5.84% for 3 yrs only in the last few weeks,not opting for a tracker because i was unsure whether interest rates would rise to curb inflation or fall to boost the economy. Now that it has fallen i think that i may have made the wrong choice.What are the chances of the interest rates rising over the next 3 yrs?

Most people would NEVER consider a Car Loan over 3 years on a rate where monthly payments might start at say £250 per month but COULD go up to £350 or COULD go down to £150. Why think of a mortgage in any different way?

If you have a FIXED income, then I would say that unless you have a MUCH lower mortgage than your income would allow, then you should hve FIXED outgoings. If not, then you are gambling on whether or not your payments will be affordable in the future.