INTEREST RATES down to 1%???????

Kez100

I'm with Abbey on a tracker which I have had for nearly ten years. How do I find out if there is a floor as there is nothing on my terms and conditions which say.

silvercar

If your terms and conditions say that the rate always follows the Bank of England base rate, then that is what the mortgage has to do.

If the terms say they follow the lenders base rate then the lender can set that to be what they want.

If the terms say that they follow the BoE base rate with a minimum applicable rate of X% then you would get the X% as your interest rate.

lisyloo

they tell me 'indexed' something-or-other means I've lost £5k or more on my home.

What they are saying is that your house value has reduced and they are using an index to calculate it.
They can't say for sure exactly what your house is worth but they have used house price sales figures generally to come up with an approximation.

The result is I still owe 100% plus after 2 years!!!!

Why are you suprised?
The dire state of the housing market has been publicised for many months.
You'd have to be taking a vacation on the moon to miss the doom & gloom.
It's there every time you switch the TV on.

I wonder whether this predicted massive drop will help me?

Most likely.
If BOE rates drop sharply then chances are that C&G variable rate will drop.
I'm not sure if it's linked to the BOE, but most likely.
However rates may not stay low forever, so if they are low you shoudl use the extra money to pay off some of your mortgage.
As well as less debt it means you'll be able to get better deals in future, so my advice is to do something sensible with the savings rather than spend it.
Long term you will benefit.

udydudy

Just been on the line to Abbey, they do not seem to have any floor for trackers tracking BoE Base rate.Atleast teh guy on the phone said that he is not aware of any floor and that if it did go to 1% then it would be tracked to that that level.

How I wish the BoE goes to 0.25% then I would pay virtually nothing as my mortgage tracks BoE BR less 0.21% which would mean i pay 0.04% and my savings would earn 6.1% tax free(fixed ISAs)

Wishful thinking, but then dreaming once in a while hasnt hurt anybody!!

I wonder if halifax has a floor. when I got my remortgage halifax were doing 0.31% below base rate. which hypothetically if base rate went to 0.25% then halifax would need to pay the mortgage holder 0.06%!! Now wouldnt that be a bargain getting paid for holding a mortgage!!

minimike2

That 0.31% below base with Halifax is what I have - it does have a "collar" - but only kicks in if base rate drops to 3%. It then carries an undefined margin, which they reserve the right to alter to a reasonable level. My guess is they would just collar the rate at 3%.

lisyloo

Wishful thinking, but then dreaming once in a while hasnt hurt anybody!!

I think we should all be a bit careful here.
Dreaming hasn't hurt anybody, but what you are wishing for is a consequence of a VERY bad scenario.

If rates go low, it means we are getting into a bad recession.
I think this is pretty much inevtiable now. the only question is how bad and how long.

This could means lots of people losing their homes and jobs and that could be you or me.

Whilst I'm sure you are not wishing for that, what you are wishing for is a consequence of some very bad times for people personally.
It will only be good for the people that keep their jobs.

For those that lose it could possibly be a personal tragedy with suicide not out of the question for a few.

So whilst I realise no-one was being malicious in any way, I would certainly say

"Be careful what you wish for".

udydudy

minimike2 wrote: »

That 0.31% below base with Halifax is what I have - it does have a "collar" - but only kicks in if base rate drops to 3%. It then carries an undefined margin, which they reserve the right to alter to a reasonable level. My guess is they would just collar the rate at 3%.

Knew it was too good to be true!

markelock

5% fixed would do me. from 2011 on, when my current fixed ends!

monkeymaster

Interest rates were as low as 3.5% in 2003 which sadly contributed to the mess we're in now. Hopefully they'll have learnt they're lesson and when the inevitable cuts come they'll not leave them too low for too long.

It's possible that in the medium term we could get much higher inflation and therefore interest rates than we've been used to of late as a result of all the money that the Governments and central banks have been flooding the system with.

moonrakerz

Looking at it from the other direction........................

If interest rates fall to 1%, with the present state of the banking industry I (and many others) would be safer and almost as well off keeping our savings under the mattress.

Therefore the banks/building societies would have no money to lend (they won't lend to each other now anyway), therefore an incredibly low mortgage rate would not actually exist - in fact no mortgage rate would exist !!