Anyone else considering a 5yr/10yr fixed rate mortgage?

samba

Dithering_Dad wrote: »

If this does occur, then interest rates will eventually return to the sort of levels we saw in the 80s, ie 10% to 15% - perhaps even more.

There is one big difference between now and then - the BoE Monetary Policy Committee control the interest these days, rather than the politicians, and I find it unlikely they will ever raise the base rate that high again.

Personally I think the current economic situation is just a correction for runaway speculation and unbridled greed. Things will get back to normal sooner rather than later.

Dithering_Dad

samba wrote: »

There is one big difference between now and then - the BoE Monetary Policy Committee control the interest these days, rather than the politicians, and I find it unlikely they will ever raise the base rate that high again.

Personally I think the current economic situation is just a correction for runaway speculation and unbridled greed. Things will get back to normal sooner rather than later.

I wish I had your optimism, bit I believe the BoE will tow the party line with low interest rates but eventually they will have to do something about inflation. Britain doesn't grow or manufacture anything anymore, so as the rest of the world recovers (a lot earlier than us because they're not as knackered due to personal & public debt), global inflation will start up and prices will rise, especially the price of oil and raw materials as manufacturing starts up again.

The price of everything we import will go up; devaluing our currency will assist in this, and our government will (probably) continue with its low rate policy to get the financial sector out of trouble. Eventually the bank will have to intervene and we'll see as rapid rises in interest rates as we have seen the rapid falls recently.

This spell of low interest rates is an opportunity for people to have a little 'breathing space' and to sort out their finances before we move onto the disaster of inflation. I for one will be making sure that I take this opportunity and make the most of it.

A further period of (mortgage) debt reduction followed by obtaining cheap long-term credit is on the cards for the Dither household methinks. :cool:

Forever_Red

I have a 5 year fix (Cheshire 5.32%) coming to an end in May and would have about 8 years remaining on the mortgage. I am looking at increasing my payments and getting it down to 5 years, so a good 5 year fix will be ideal for me now, then I wont have to worry about the rates when the fix finishes.

Dithering_Dad wrote: »

I might even look at 10 year fixes. Mrs Dither and I have pretty much decided to stay put in our current house until our littlest one leaves school (she is 7 this year), so that's approximately 10 years if she goes into 6th form, etc. It would be nice to have the mortgage cleared just as our nest empties and we can then sell up and buy a nice 2 bed stone cottage (telling kids where we have moved to is optional )

My eldest daughter, age 11, started secondary school in September (year 7 - the old 1st year) and anyone her age and below has to stay in full time education until they are 18 (new government legislation) so you have an extra couple of years until you downsize and hide from the kids

Alan

maryjane01

we opted for a 10 year fix at 5.49 in September last year, we had booked the rate in April last year. At the time the tracker that was on offer was +0.34 for life. I was tossing up between the 2 and went for the security of the fix. I daren't look at what my interest payable would be if I had taken the tracker.

When I reasses the situation now, I feel comfortable because I still would have made the same decision. My OH is self employed, our first little one is due on July 1st and I want to take time out to be a mum. If we had sat around and watched and waited for a lower fixed rate, on one self employed income we may not have been able to remortgage at all and I would hate to think where we would be if rates rebounded.

Everybodys situation is different and you just try and make the best decision for you given the facts available at the time.

I have to say the offset mortgage is brilliant, I love being able to overpay and also have the security that we could draw down on it any time if things took a turn for a worse (OH lost contracts etc). I would highly recommend an offset mortgage for the flexability it offers (but it also depends on what rate you get it at!)

bluewire

This question all depends on what you are looking for.

1. Security.....are you worried that you would not be able to afford you payments if interest went up by 3% - 4% or more then fix. You will be much safer this way.

2. Cash in your pocket/playing the markets.....are you comfortable to watch the markets for movement and wait as long as possible before interest rates rise above what you can afford/want to pay then stick to a SVR or other flex rate.


If you look at the last economy to reduce rates to 0.5% (before the US) this was Japan (moved to 0.5% in 2001 due to the recession (the also used Quantitive Easing like the BoE has just) (Not sure if that is spelt correctly)) which has recently reduced the rate from 0.5% to 0.25%.

The BoE would be worried about increasing the base rate too fast or even before they put other things back (remove the QE) as that would cause more people to panic and stop spending.

Watch the news (not some types as they will have you crying before you get to the end of the article about how you will have to live on 15p a year in t he future due to new tax rises):mad:

Do what ever you are comfortable with and remember......Just because someone said that something would happen doesn't mean that it will.;)

Dithering_Dad

Forever_Red wrote: »

I have a 5 year fix (Cheshire 5.32%) coming to an end in May and would have about 8 years remaining on the mortgage. I am looking at increasing my payments and getting it down to 5 years, so a good 5 year fix will be ideal for me now, then I wont have to worry about the rates when the fix finishes.

Hi FR, I've just noticed your signature. I'm an FC United fan too. I was a 'founding member' and went to their first match at Leigh RMI. Haven't been much this season though due to working away from home so much .

Do you get to the games much?

clairehi

DD your fears re interest rates are similar to mine, and my fix has just ended.

I was planning to sit on the base rate tracker and coin it in for a while and see what happens, but the thing I had not counted on was the speed of the decline in house prices. I am hoping that we will just scrape 75% on valuation. the fixed rates on offer for ltv>75% are too high to make fixing an attratice proposition for us.

Dithering_Dad

clairehi wrote: »

DD your fears re interest rates are similar to mine, and my fix has just ended.

I was planning to sit on the base rate tracker and coin it in for a while and see what happens, but the thing I had not counted on was the speed of the decline in house prices. I am hoping that we will just scrape 75% on valuation. the fixed rates on offer for ltv>75% are too high to make fixing an attratice proposition for us.

Is there any way you could make overpayments on your mortgage to increase your equity and make sure that you get the 75% LTV?

We used a lot of the sites recommended by MSE to reduce our insurance bills(house, life, car) and utility bills (uswitch, etc), batch cooking to reduce our food bills. All cash freed up was ploughed onto our mortgage. We also cashed in any failing investments (such as a crappy endowment) and paid the balances and monthly premiums onto the mortgage instead. We also increased our income when i left my employment and went freelance - not everyone can do this but could work overtime or do bar work in the evenings/weekends. It's surprising just how much you can overpay your mortgage if you really set your mind to it and every £ overpaid really does make a huge difference on the amount of interest you pay over the term of a mortgage.

Pop over to the MFW and have a look at the overpayment calculators. The last time I looked, I'd knocked 8 years off my mortgage term and saved tens of thousands of pounds in bank interest.

p.s. if you remortgage with your existing provider, you shouldn't have to revalue your house, so won't have a problem with LTV.

whu

DD- I went for an offset 5 year fixed last summer - I am paying "over the odds" compared to some mortgage rates available at the moment but am happy with the security of knowing how much I need to pay each month and couldn't predict that the BOE rate would go so low so don't have any regrets- I reckon if you could get a 5 year fixed for anything about 5% that wouldn't be bad

Forever_Red

Dithering_Dad wrote: »

Hi FR, I've just noticed your signature. I'm an FC United fan too. I was a 'founding member' and went to their first match at Leigh RMI. Haven't been much this season though due to working away from home so much .

Do you get to the games much?

Hi DD, just PM'd you.