CBS Offering BTL fixed at 3.99 for 5 Years

WTF?_2

pickles110564 wrote: »

Thanx !!!!!!? I think I will see what they are offering in Jan or Feb because recession will be hitting very hard then and if retail does not do well over Christmas the rates will have to move even lower.

Bear in mind that there's a limit to what the government can make the banks pass on as a response to headline rate cuts, even with half the mortgage system now under government control.

The notional link between base rates and real world rates is now quite tenuous and the Japanese public even with years of zero percent interest rates never got to borrow from the banks at anything like that level themselves. Don't leave it too long.

Gorgeous_George

I would only swap a lifetime tracker (+0.75%) for a 5 year fix IF I planned to clear my mortgage in the 5 years.

It's clearly a good deal and, in the spirit of fair play, it provides some security for CBS as well as you. It's just the 5 year term that would concern me.

GG

pickles110564

Gorgeous_George wrote: »

I would only swap a lifetime tracker (+0.75%) for a 5 year fix IF I planned to clear my mortgage in the 5 years.

It's clearly a good deal and, in the spirit of fair play, it provides some security for CBS as well as you. It's just the 5 year term that would concern me.

GG

Why would the 5 year term concern you ?

silvercar

'cos your trading a lifetime deal for a 5 year one. In 5 years time, interest rates could be 6 or 7 per cent and the priveleged mortgage rate 7 or 8 per cent.

If you were planning on clearing the mortgage within a few years then its a good deal; if you plan on having a large mortgage in 5 years time it creates a risk.

Gorgeous_George

Thanks silvercar, that's it in a nutshell.

At the moment, the OP is in a position of strength. Holding a lifetime tracker deal on a great rate, the CBS are worried that BofE base rates may fall towards 0%. The return from the OP would be 0.75% and CBS cannot borrow at that rate. They would need access to near 0% funds to avoid making a loss.

If he takes the 5-year deal, he will be in a poor position in 5 years' time. Especially so if house prices remain low and his LTV is less than perfect. It's not such a problem if the remaining debt is low.

The big question is what do we think BofE base rates will be over the next 5 years. My guess is that they will average 3% so, for me, it is not worth taking the 3.99% deal.

GG