remortgage dilemma...help!!

dawg5

My fixed rate motgage expired with halifax last month and i and currently back on svr of 7%....after consulting with broker a few weeks ago a new 5 year fixed rate of 6.05% was recommended with a change to scottish widows (no fee).

This news of rate drop today has left me so confused now, do i go ahead with the change (nothing has gone through yet just in the process of sending out paperwork) or stick with halifax as i heard the svr is going to drop to 6.5% and with no admin/exit fees to think about this might be cheaper???

The broker has recommended i go ahead anyway as planned.

So confused with all this....any help much appreiciated. Thanks

horseface

Hi dawg5,
if I were you, I wouldn't fix into a 5 year rate of 6.05% right now -- with or without arrangement fees incentives. We are in high interest period right now. It's much more likely that interest rate will drop than rise in the medium term.

Basic principles of economics: In periods of high interest: go variable rate. In periods of low interest: go fixed rate.

Even if you want a fixed rate, I would probably look for a shorter tenor (say 2 or 3 years).

Lastly, I would say that the rate drop of 50bps earlier this week would not have filtered through to mortgage products yet -- it certainly isn't in your quote. But you should definitely see better products coming onto the market in the coming weeks to reflect this cheaper base.

Hope this is helpful

markelock

the broker will be making £, hence the recommendation.

Are there no deals at 6%?

herbiesjp

Did you specifically ask for a 5 year fixed rate?

Some lenders have got trackers, that will reflect the drop yesterday in rates - did you discuss those options?

dawg5

At the time i asked for a fixed deal and the 5 year seemed to be better option as thats what we had previously, but now im not so sure with these interest rates, apparently halifax svr will be reduced from november 1st to 6.5%.

herbiesjp

But the 6.5% is still higher than 6.05% with SW and even taking into account the exit fee you will still be better off over the 5 year period. Thats assuming there are no further rate changes in that 5 year period up or down.

But if you went for a fixed rate you must have wanted that security of knowing your monthly payments?

You could always wait and see what happens to fixed rates - swap rates have been coming down again, and this may be an indication that lenders could look to reduce their fixed rate options. However we'll have to see what fees they attach to those rates

dawg5

Thats pretty much what the broker said when i called earlier to ask their advice again. The fixed rate was for the secirity of knowing what the payments will be each month yes, but i wouldnt want to paying over the odds for that security.