Fix now or hold out?

MartialArtMan

I'm looking to renew my mortgage deal. I have been offered 5.99% fixed for 2 years with my current lender but with all the current news of interest rates impending drop I'm wondering whether to just go on to a variable rate until the lenders are offering better deals.

What do you think I should do? Go with the fix rate deal or go on to variable rate until something better comes along??

feisty1

lenders lend based on the amount they bought the money for....dont expect to see the market flooded with under 5% fixed rates....its not going to happen overnight....depends if u want peace of mind knowing what yr monthly payments are going to be or prepared to hold out and whilst doing so pay the SVR. You haven't mentioned tracker which suggests to me you like to "play safe"

I am a Mortgage Adviser

You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

midflight

You haven't said what your current deal is (ie what jump in interest rate you're going to be facing if you lapse onto SVR). Also, it can depend on the size of your mortgage (eg ratio of fees). Give us a bit more info.

MyHouse75

This is something I have been pondering with as well... Any advice would be very much appreciated.

Here's our situation:

-Took out a 25 year capital and interest mortgage in October 2006 with RBS, 2 year fixed rate 4.89%

-The 2 year fixed rate has recently come to and end, since last week we are now on a SVR rate of 7.19%

-Our mortgage repayments will go up by 250 pounds a month now that we have moved to the SVR rate. A lot of money, so we are quite eager to move back to a fixed rate.

-I called my bank today. They had a pre-recorded message to all those on the SVR rate (me!) that there will be a 0.5% cut in this rate thanks to the Bank of England announcement this week. I don't know for sure when this drop in the rate will start to take effect, apparently I will be told in writing.

- Due to the 0.5% drop my SVR rate is now (or will be soon, I hope!) 6.68%.

Here's what we were planning to do before we heard about the cut in interest rates:

We were offered a new fixed mortgage deal (again, with RBS, we haven't looked elsewhere) of 6.04% for either 2,3,5,7 or 10 years with a product fee of 999 pounds or a fixed rate of 5.65% for 5 years with a fee of 3499 pounds:eek: .


After discussing this with my hubby, we decided to go for a 2 year fixed rate deal for 6,04% and pay the 999 fee. We haven't signed the paperwork yet.

THE QUESTION:

Should we sign up for this 2 year fixed rate deal now or stay on the SVR rate a little bit longer and hope that we can get a better fixed rate in the near future? What are others ona SVR rate out there doing? Would be gutted if we signed the paperwork and then found out that had we waited a few months we could have got a much better fixed deal. I have heard rumours that there will be another interest rate cut soon or is this unlikely?

Any opinions and comments on this are very much welcome! We are really unsure on how to proceed and keep changing our minds every 5min

rp8049

If you have a reasonable LTV, then I would hold out personally. I'm in a similar situation - fixed rate of 4.89 is up in january, but I'm of the opinion that now is not a good time to try to fix, given that the fixed rates are all screwed due to banks not lending to each other at good rates, and that combined with the fact that the base rate is now going to fall (obviously no-one can know for sure but could fall as low as 3% in the next year).

From the research I've done and following the economy and markets, my gut feeling is a tracker is on the money at the moment - they're generally at lower rates than fixed at the moment and are only really likely to go down in the near future (obviously not guaranteed though).

I've decided to get a lifetime tracker (fee-free) and hopefully reap the benefits of the plummeting economy over the next couple of years, by which time there may well be some much nicer looking fixed rates available.

atlantis187

MyHouse75 wrote: »

This is something I have been pondering with as well... Any advice would be very much appreciated.

Here's our situation:

-Took out a 25 year capital and interest mortgage in October 2006 with RBS, 2 year fixed rate 4.89%

-The 2 year fixed rate has recently come to and end, since last week we are now on a SVR rate of 7.19%

-Our mortgage repayments will go up by 250 pounds a month now that we have moved to the SVR rate. A lot of money, so we are quite eager to move back to a fixed rate.

-I called my bank today. They had a pre-recorded message to all those on the SVR rate (me!) that there will be a 0.5% cut in this rate thanks to the Bank of England announcement this week. I don't know for sure when this drop in the rate will start to take effect, apparently I will be told in writing.

- Due to the 0.5% drop my SVR rate is now (or will be soon, I hope!) 6.68%.

Here's what we were planning to do before we heard about the cut in interest rates:

We were offered a new fixed mortgage deal (again, with RBS, we haven't looked elsewhere) of 6.04% for either 2,3,5,7 or 10 years with a product fee of 999 pounds or a fixed rate of 5.65% for 5 years with a fee of 3499 pounds:eek: .


After discussing this with my hubby, we decided to go for a 2 year fixed rate deal for 6,04% and pay the 999 fee. We haven't signed the paperwork yet.

THE QUESTION:

Should we sign up for this 2 year fixed rate deal now or stay on the SVR rate a little bit longer and hope that we can get a better fixed rate in the near future? What are others ona SVR rate out there doing? Would be gutted if we signed the paperwork and then found out that had we waited a few months we could have got a much better fixed deal. I have heard rumours that there will be another interest rate cut soon or is this unlikely?

Any opinions and comments on this are very much welcome! We are really unsure on how to proceed and keep changing our minds every 5min

We are currently in the exact situation as you we took out a 25 yr mortgage with RBS on the same deal as yourself fixed for 2yrs at 4.89% now them 2 yrs are coming to an end at 30th Nov we phoned them and they have offered us the exact same deals as urself at a rate of 5.45% fixed for 5 years with a fee of £3499.

This is a really really UNCOMPETATIVE deal. Have been shopping around and finally applied for a First Direct Tracker deal at 0.79% above base rate for the life of the mortgage. This deal is alot more competative than the RBS deal and with interest rates coming down yeasterday this has made it even more better as the deal i'll currently be on it 5.29% with no fee's to pay. Also with interest rates likely to fall again in the near I think this would work out better in the long run.

MyHouse75

Thanks so much for your responses rp8049 and atlantis187! I have come to the same conclusion, the deal we were offered by RBS for a new fixed deal is not competitive.

Atlantis187, how cool to actually "bump into" someone who has the same mortgage deal as we do! I remember writing here two years ago when we took out the mortgage and there were loads of people applying for new fixed rate mortgages at the time, but I couldn't find anyone who was going for the same RBS deal as we were.

Yep, me and my hubby decided not to sign the 2 year fixed deal on 6.04% with RBS. We are still on the SVR and will try to get a better fixed deal. We really want to stay on a fixed rate mortgage as we like the security of knowing how much we have to pay each month. We have two young kids, husband is changing jobs etc. so we really want the security of knowing what we need to pay each month in order to plan ahead and make sure we can afford the payments not just now when interest rates are going down, but in five years time as well. I know there are brilliant tracker deals out there at the moment, but if we could get a fixed rate deal anywhere near 5.00% we would be happy...however there seem to be no deals as good as that around, so we'll wait for a month of two if better fixed deals come around and then we'll decice what to do. Definitely don't want to stay on the SVR for more than a couple of months.

Found so many good tips from this forum, I just love this site!!! Loads to think about again, and just heard that RBS will be the first bank to be nationalised, not sure if that means good mortgage deals on the horizon or the opposite?!

atlantis187

Thats proper strange being on the exact same deal as urself.

When we first signed up to RBS 2yrs ago I was reccommending everyone to them as they had some of the best deals around but recently I cant wait to take my mortgage away from them they have just gone soo poor over the last year or so with their deals.

Also With everything happening with the economy I think the saffest place to put ur money is into an offset mortgage.

Your very unlikely to find a fixed deal below the 5% mark in these current times. Only thing I would reccomend from doing my own research over the past few months I have found the following lenders with most of the competative deals around. Have a look at their products u might find something to suit ur situation.

First Direct
HSBC
Barclays/woolwich
Nationwide

Jett

Interesting...

My fixed with ING at 4.95 expires in Feb 09 whilst i have a little more time on my hands i'm starting to think of my next move just the same! Has any one signed up to anything yet or made you minds up with what you are doing?

manikm

atlantis187 wrote: »

We are currently in the exact situation as you we took out a 25 yr mortgage with RBS on the same deal as yourself fixed for 2yrs at 4.89% now them 2 yrs are coming to an end at 30th Nov we phoned them and they have offered us the exact same deals as urself at a rate of 5.45% fixed for 5 years with a fee of £3499.

This is a really really UNCOMPETATIVE deal. Have been shopping around and finally applied for a First Direct Tracker deal at 0.79% above base rate for the life of the mortgage. This deal is alot more competative than the RBS deal and with interest rates coming down yeasterday this has made it even more better as the deal i'll currently be on it 5.29% with no fee's to pay. Also with interest rates likely to fall again in the near I think this would work out better in the long run.

i have just remortgaged from RBS to HSBC - i found RBS deals rubbish! i ended up with the HSBC lifetime tracker - have only just completed.

good luck with what you decide on!