Best 5 year fixed deal ever???

savemoney

So it may well just be for current customers. Well If it was me I would take that offer.

savemoney

I suspect there will be another rate reduction to 2% its just a guess but I agree rates in long term will increase and a deal like that would be great

niceguyed wrote: »

Short term rates set to drop further (who knows how much further as not many predicted 1.5% last cut) but over the course of 5 years you would expect rates to rise again. Is the mortgage portable? Personally I would take it as the surety of being on what is still a comparitively low rate of 3.99 would give me peace of mind.

opinions4u

Read the small print from start to finish. It looks a fantastic deal and I'd sign up for it!

Gut reaction is:

1) Are you sure? Is it really 3.99% and not 5.99%?
2) When best buy deals on the market are over 5%, what are their reasons for offering it?
3) How are they funding it? What's in it for them - I can't see any profit.

But if you've got it right, wow for you. And hope for others wanting a fix!

handful

Hi opinions4u. First of all it is definitely 3.99% unless they have made a mistake but the APR looks about right to me. They must be making a judgement that rates will be remaining lower than 0.75% below 3.99% over the next 5 years in order to benefit from me accepting this offer as that is the point at which they would benefit as that is my current tracker rate??

I'm not an expert but IMHO I can't see that their assumptions stack up. If there is a run on the pound as is suggested, we could easily see rates escalating sooner rather than later although this would probably be more likely in a change of government.

I have been with them for 5 years now and the other part of my mortgage is a 4.25% fix which is due to end on 31/12/2008 and I thought that I'd done well on this one as I have been paying below base for all of the last 5 years apart from the last 2 weeks!!

I would also mention that I don't always get it right, In the 90's I had a horrendous stabiliser mortgage with Citibank that cost me a fortune so I see this as payback time!!

chardir

The main advantage for them is that they lock you in for another 5 years. If you want to move house in that time you'll be hit by a 4% fee.

handful

Hi chardir - not so. I moved 2 years ago 3 years into my 5 year 4.25% fixed deal and I ported that with no problem or charges. It would only be an issue if I sold and redeemed the mortgage. Not much chance of that happening I'm reasonably confident of that.

luckyfool

opinions4u wrote: »

2) When best buy deals on the market are over 5%, what are their reasons for offering it?
3) How are they funding it? What's in it for them - I can't see any profit.

They are offering it to someone they are already committed to lending to for the balance of the mortgage term at 0.75% over base rate (3.75%) without a floor, and with rates expected to continue to fall in the short to medium term.

Given that 3 Month LIBOR variable funding is still around 4.17% and 5 yr Fixed Rate Swaps (which tend to fund fixed rates) are 3.97% getting the OP switched onto a fixed rate makes more sense than keeping them on their current tracker deal. Even more so when they factor in the certainty and can mitigate the risk of exposure to further rate cuts.

Of course the deal would not make commercial sense for new customers currently.

jawster

I think they have made you this offer because the current tracker you are on is incredibly fantastic for you but not so much for them.
They are obviously trying to tempt people out of that great deal and move them on to something more in their favour.

There is no doubt that 3.99% is an unheard of deal in the general market at present. However given the strong likelihood of rates falling further next year, fixed rates are likely to fall and they might offer an even better fixed rate to you in a few months time.

Depends on your attitude to risk - personally I'd take the letter as a very strong sign that the deal you are currently on is actually the better one, companies don't try and convince their customers to move to lower profit products, they only upsell.

luckyfool

jawster - Correct . . . having said that 3.99% fixed for 5 years is excellent and allows the OP to lockin that rate and eliminate any uncertainty. If I was sure that I would be staying in the property for 5 yrs I would personally grab the fixed deal and run. OK so it's a good deal for the lender as well, that doesn't mean its not also a good deal and the right thing to do for the OP.

mstopham

What's the deal at the end of 5 years? Is it SVR or BBR? The tie in is very low but could you get stung at the end?