Fixed Rate 5 Year Mortgage - A Terrible Mistake?

audioblackout

Hi guys,

After reading on here two weeks ago about things in the economy going belly up, and panicking a bit when the banking bail out couldn't be reached in the US, I quickly took out a 5 year fixed Mortgage @ 5.89% with Halifax.

Now it seems like after an interest rate cut, and now a small 0.15% libor cut, and the banks having loads of money pumped into them, I'm starting to wonder if I was wrong to do this.

And now there's talk of even more interest rate cuts to stimulate the ecomony.

Kind of thinking right now I made a panic judgement that will leave me seriously out of pocket, especially if I'm going to have less money to pay out due to the 'recession'....

Does anyone have any thoughts on this? Would be much apppreciated so I can sleep at night!!!!

manikm

audioblackout wrote: »

Hi guys,

After reading on here two weeks ago about things in the economy going belly up, and panicking a bit when the banking bail out couldn't be reached in the US, I quickly took out a 5 year fixed Mortgage @ 5.89% with Halifax.

Now it seems like after an interest rate cut, and now a small 0.15% libor cut, and the banks having loads of money pumped into them, I'm starting to wonder if I was wrong to do this.

And now there's talk of even more interest rate cuts to stimulate the ecomony.

Kind of thinking right now I made a panic judgement that will leave me seriously out of pocket, especially if I'm going to have less money to pay out due to the 'recession'....

Does anyone have any thoughts on this? Would be much apppreciated so I can sleep at night!!!!

i got a tracker at .79 above base and therefore paying 5.29% - but at least you know you're payments for the next 5 years! and can sleep soundly at night.

i'll always go to bed thinking !!!!, what if rates go mental cos of the economy, the way it is... who knows! could go up half a percent, just as quickly it went down...

NO one knows!

at least u pay off 5 years worth of your property!! guarenteed.

tomstickland

I fixed at 6.3% a few months ago. Nothing much I can do about it. Just get on with life.

getmore4less

The value of your house and investments including money purchase pensions will make your mortgage payments look like small change.

Ian_Griffiths_Halifax

audioblackout, you have stability for the next 5 years. You made a good choice.

hostman

I'm in the same boat and "wish" I took a gamble and plumped for a tracker, I'd be paying £40 less and probably another £40 less by year end if rates continue to slide.

But never mind, I didn't, I opted for a fix rate - I know my payment is never going to go up .... or down for five years, life goes on.

beecher

I've taken out a 5 year fix, and am glad of it. I wanted security and to know how much I'm going to be paying out - who knows what kind of state the economy is going to be in over the next 5 years and where interest rates will be at the end of it. Best to just forget about your mortgage for 5 years and be thankful you're able to - there's plenty of other stuff in life to lose sleep over.

2latenow

We just renewed for 7yrs @ 5.64...
- I know it's affordable on our current income
- If rates continue to go down... we pay off any spare against the capital
- If rates go up... ? Makes no difference , so no worries (actually makes it worthwhile to save instead)
- 5 or 7 years... (vs 2 yrs) makes the arrangement fees more cost effective
- You made the best decision at the time based on facts available at the time (I assume) - dont beat yourself up about it now
- Sit back, relax and get on with the important things in life (let the Tracker Boys have the worry)

If you really worry you are paying "too much" now that rates have dropped, know your ERC terms... But my guess is unless your ERC terms are really really good, rates would have to be below 3.5% before it would make any sense.... (and as others post elsewhere here, many banks have a floor around there anyway).

Ian_Griffiths_Halifax

2latenow wrote: »

We just renewed for 7yrs @ 5.64...
- I know it's affordable on our current income
- If rates continue to go down... we pay off any spare against the capital
- If rates go up... ? Makes no difference , so no worries (actually makes it worthwhile to save instead)
- 5 or 7 years... (vs 2 yrs) makes the arrangement fees more cost effective
- You made the best decision at the time based on facts available at the time (I assume) - dont beat yourself up about it now
- Sit back, relax and get on with the important things in life (let the Tracker Boys have the worry)

If you really worry you are paying "too much" now that rates have dropped, know your ERC terms... But my guess is unless your ERC terms are really really good, rates would have to be below 3.5% before it would make any sense.... (and as others post elsewhere here, many banks have a floor around there anyway).

If you renewed at 5.64% on a Fixed Rate, then you wouldn't be effected by the drop and so wouldn't have spare to pay off against the capital (from any reduction in rates).

Bog_Brush_2

audioblackout wrote: »

Hi guys,

After reading on here two weeks ago about things in the economy going belly up, and panicking a bit when the banking bail out couldn't be reached in the US, I quickly took out a 5 year fixed Mortgage @ 5.89% with Halifax.

!

I took the 5 year @ 5.89 with the Halifax and I am happy I did. I can remember paying 13% in late eighties, so I know where I am for the next 5 years. There is always a better deal to be had or a bigger mistake to make.
sleep easy

Bog

purple12

I agree with what others have said. You can afford it and you don't need to worry about it for five years! Just try to ignore fluctuations in the interest rates as much as possible.