Lenders and brokers say fix your mortgage

carolt

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5536094.ece

New deals from Halifax and HSBC and other competitive offers reflect the fact banks do not expect rates to fall much further

Fixing your mortgage now — before another fall in interest rates — may seem like bad advice, but that is the message from some of Britain’s biggest lenders and brokers.

...HSBC do not expect fixed rates to fall further. Andy Mielczarek at HSBC said: “Given that banks also have to be fair to their saver customers, I think it’s unlikely that new mortgage rates will fall further.”

Halifax believes rates may fall a little further, but cuts are thought unlikely to exceed 0.25 percentage points.
Last week, swap rates, the rate banks pay to borrow money to fund fixed-rate mortgages, rose after falling 0.36 percentage points in the past fortnight.

The Council of Mortgage Lenders (CML) told the Commons Treasury committee last week that the government’s bailout of the banking industry had made it more difficult for lenders to introduce mortgages.

The CML said: “The government urgently needs to review the cumulative effect of its recapitalisation . . . on the willingness and capacity of large lenders to provide mortgage funding. There will be no return in the foreseeable future to the levels of new lending and transactions that we saw in 2007.”

chucky

for someone who buys a property now using a mortgage the options that you have are...

Buy a property that may/will drop in price at a lower mortgage interest rate.

or

Buy a property that has/may dropped in price at a higher mortgage interest rate.

An interesting and difficult choice for a buyer - over 15/20/25 years which is the cheaper option...

carolt

Exactly - for me personally, the fact that long term fixes are not widely available to FTB's has a big part in my decision-making.

I'm not going to take a gamble on a low-rate 2 year fix to buy a property at current prices, if I think that rates are going to shoot up after the 2 year fix has ended, and/or house prices are going to fall by so much it's not worth it.

As I think either of these possibilities are quite likely, I'm not buying for now.

But for those who already own, it sounds interesting advice - forego short term trackers now and look for longer-term fixed rates, now - not after any further rate falls - if longer-term security matters.

chucky

carolt wrote: »

Exactly - for me personally, the fact that long term fixes are not widely available to FTB's has a big part in my decision-making.

I'm not going to take a gamble on a low-rate 2 year fix to buy a property at current prices, if I think that rates are going to shoot up after the 2 year fix has ended, and/or house prices are going to fall by so much it's not worth it.

As I think either of these possibilities are quite likely, I'm not buying for now.

But for those who already own, it sounds interesting advice - forego short term trackers now and look for longer-term fixed rates, now - not after any further rate falls - if longer-term security matters.

but what happens when you can get a 5 year or even 10 year fixed at a competitive rate. there are some attractive 5 year fixed deals out there.

Really2

carolt wrote: »

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5536094.ece

New deals from Halifax and HSBC and other competitive offers reflect the fact banks do not expect rates to fall much further

Fixing your mortgage now — before another fall in interest rates — may seem like bad advice, but that is the message from some of Britain’s biggest lenders and brokers.

...HSBC do not expect fixed rates to fall further. Andy Mielczarek at HSBC said: “Given that banks also have to be fair to their saver customers, I think it’s unlikely that new mortgage rates will fall further.”

Halifax believes rates may fall a little further, but cuts are thought unlikely to exceed 0.25 percentage points.
Last week, swap rates, the rate banks pay to borrow money to fund fixed-rate mortgages, rose after falling 0.36 percentage points in the past fortnight.

The Council of Mortgage Lenders (CML) told the Commons Treasury committee last week that the government’s bailout of the banking industry had made it more difficult for lenders to introduce mortgages.

The CML said: “The government urgently needs to review the cumulative effect of its recapitalisation . . . on the willingness and capacity of large lenders to provide mortgage funding. There will be no return in the foreseeable future to the levels of new lending and transactions that we saw in 2007.”

I ain't even going to bother fixing until banks actualy want to lend you money.

I think this is "get off your tracker it hurts and is likely to stay low for some time, Please"

carolt

Yes, may well be true.

carolt

chucky wrote: »

but what happens when you can get a 5 year or even 10 year fixed at a competitive rate. there are some attractive 5 year fixed deals out there.

I'd want 10 year minimum - rates still lousy.

I'm not confident all this economic pain will be over in 5 years, and security is important to me.

Thrugelmir

carolt wrote: »

I'd want 10 year minimum - rates still lousy.

I'm not confident all this economic pain will be over in 5 years, and security is important to me.

So what do you consider a reasonable rate for a 10 year fix?

Even in the USA long term rates, which is more the norm over there, still average 4.59% for 20 year+ fixed. Even though the BR is more or less at zero. The mortgage rate only more recently has correlated to BOE base rate. On the back of tracker rate mortgages.

beecher

I don't think 5 year deals are very competitive at the moment so I'm sitting on the SVR in hope that better deals come up. Don't trust the banks to be saying what's best for the customer rather than what's best for them.

ess0two

chucky wrote: »

for someone who buys a property now using a mortgage the options that you have are...

Buy a property that may/will drop in price at a lower mortgage interest rate.

or

Buy a property that has/may dropped in price at a higher mortgage interest rate.

An interesting and difficult choice for a buyer - over 15/20/25 years which is the cheaper option...

All depends if you have age on your side,waiting years longer just prolongs the effects of paying a mortgage,if you can over pay fine.
Personally if i'd hit my 40's and had'nt yet bought i'd look to rent or stay renting.

chucky

carolt wrote: »

I'd want 10 year minimum - rates still lousy.

I'm not confident all this economic pain will be over in 5 years, and security is important to me.

that would be only you could decide on - my point was that too much focus is on the house price instead of the other contributory costs involved in buying a property short and long term.