Is it Time to buy and secure a long-term fixed rate mortgage?

sympatex

Dithering_Dad wrote: »

This from the Mortgage board:

http://forums.moneysavingexpert.com/showthread.html?t=1578999

The OP has found a 5 year fix at 3.99. So if Interest rates over that 5 year period averaged out at 10% on a £100k interest only mortgage:

3.99% fixed: £3990 pa or £332.50 per month.
10% unfixed: £10000pa or £833 per month.

Over the 5 year period, the fixed rate person could save £30,050 in interest payments.

Add in the savings on stamp duty, cheaper furnishings and fittings, cheaper labour for any renovations, building or decorating work and the savings are even more...

CAVEAT: Naturally, if you believe that the current low interest rates are here to stay then these calculations won't add up and you shouldn't get a fixed rate mortgage...

Average out at 10%? lol. as they are 0.5% now you're expecting an equal amount of time for them to be at 19.5%? I read a few of your posts on this thread but i don't know what you're advocating anymore.
It's almost a 50/50 split for mortgages on fix and mortgages on variable. What's good for one is bad for the other and vice versa. People who are desperate to buy should sit on their hands and wait. No more bailouts says Mervyn, No more lending at high multiples says banks (oh and a 25% deposit please). House prices are heading down. Interest rates won't stay low for long, government inflation indices are a complete nonsense CPI on way up, RPI on way down? Right ok. It's a shame i can't eat my house isn't it because everything else is spiralling and its not down. Except employment and savings. In the general scheme of things, there's no money, house prices will have to come down if the vendors want to move.

Heyman_2

Pobby wrote: »

I still think that the market got very out of kilter because of the way that lenders introduced some rather questionable deals. I also think that properties would have remained a good deal lower if the old ways had been adhered to.

It's the same with any market though - it's all down to competition and risk. All it took in the Mortgage market was one or two lenders to start taking bigger risks with the deals they offered and reaping the benefits in a somewhat buoyant economy to 'show the way' to the big lenders who followed suit and then it all ended in tears.

I don't think the banks are going to need much 'regulation' in terms of mortgage multiples from the FSA, given the extent to which many of them have had their fingers burnt.

lostinrates

Is it time? I don't know. We've felt its the right time when its the right place at the right place. The longer we've waited the harder it is to feel something is the right place. One gets more willing to comprimise and more desperate to find it, but also, more aware of the bad news, the risks and the very inconstancy that, IMHO, is making this time harder for everybody.

I'm looking at financing today and my heart just isn't in it.

Dithering_Dad

Heyman wrote: »

:rotfl: Why, it's almost as if you have a reputation that precedes you or something!!! I have to admit, I opened this thread up expecting to see carnage given that you were the OP, that's not a dig at you or anything, just seems to go that way doesn't it? :rolleyes:

lol, heyman. I must have a reputation that precedes me but I'd love to know what it is. I keep getting lumped in with the HPC deny'rs and the property bulls, but the facts just don't support this.

I saw the property crash/recession coming and started massively overpaying my mortgage and encouraging others to do so as well. I cashed in my investments and put them onto my mortgage or into cash funds (i.e. my pension). Hardly the actions of someone who deny's that the was going to be/is a property crash.

I also only own one property - my family home. Once we bought it we set about paying down the mortgage. I've never really concentrated on how much the house was supposedly 'worth', only on how much we had paid for it and how much my mortgage was (I'm trying to increase my percentage ownership and just use those two values to calculate). I've never wanted to invest in other properties because I think BTL an illiquid and poor investment. Hardly the actions of someone who is a property bull.

I wish some of those who dislike me on this forum would have the guts to come here and tell me why because I've no idea what I do to rile them. Indeed I want a quiet life so much that if there is something I do then I'll happily change it.

lostinrates

Dithering_Dad wrote: »

I wish some of those who dislike me on this forum would have the guts to come here and tell me why because I've no idea what I do to rile them. Indeed I want a quiet life so much that if there is something I do then I'll happily change it.

DD, you know we are chums, and so I say this in no want to create confrontation. I think, as I said before, almost NO user of this board can claim to have been always at their most polite, or to have writing as they would always like to be written to. I believe these lapses in good manners from all of us have been the cause of many a row, rather than the fact we hold contrasting opinions. I think the best way to tackle it, should one want to, is to type as one would be typed to. Not always easy. I have been saddened at the tone directed in the last couple of days towards Generali, for example. What can one do?

ETA: DD might remember we resolved some 'misunderstandings' via PM. I am appreciative that our communication is now supportive and mutually respectful. It doesn't mean we always agree, but I think its fair to say we always hear/read each other out.

Dithering_Dad

sympatex wrote: »

Average out at 10%? lol. as they are 0.5% now you're expecting an equal amount of time for them to be at 19.5%? I read a few of your posts on this thread but i don't know what you're advocating anymore.
It's almost a 50/50 split for mortgages on fix and mortgages on variable. What's good for one is bad for the other and vice versa. People who are desperate to buy should sit on their hands and wait. No more bailouts says Mervyn, No more lending at high multiples says banks (oh and a 25% deposit please). House prices are heading down. Interest rates won't stay low for long, government inflation indices are a complete nonsense CPI on way up, RPI on way down? Right ok. It's a shame i can't eat my house isn't it because everything else is spiralling and its not down. Except employment and savings. In the general scheme of things, there's no money, house prices will have to come down if the vendors want to move.

Depends on the time scale and the percentage rises in rates. Rates have fallen to 0.5% with unprecedented speed to try and prevent a lasting recession. I believe they will rise at an equally unprecedented rate in response to high inflation.

If you time your fixed rate right (which will be as hard as guessing the bottom of the housing market or stock market) you could fix your rate and then a month or so later see rates fly up as fast as they have fallen recently, perhaps 1 or 2% per month. If we have a similar situation as in the 1980s we could see rates hit 15% for a short time and stay around the 8% to 13% mark for a much longer period (say 5 years). In the period that you have your fixed rate mortgage we could see an average of 10% interest rates.

If you really believe that 5% average interest rates are the norm then you've fallen for Labour's spin. We've had a decade of unrealistic interest rates fuelled by cheap global credit. This period of cheap credit has ended and will not return for (hopefully) a long time.

People on here are rightly demanding a return to the days where we had sensible mortgage lending with realistic multiples (3 x salary) and decent deposits. What some have forgotten is that part of that sensible mortgage lending will be a return to higher (or realistic) interest rates.

Of course, this is just my view and you're entitled to agree or disagree.

Pobby

Thanks DD. Your predictions about higher IRs are heartening for net savers indeed. I whole heartedly agree regarding Labour spin that 5% IRs would go on forever. At the same time I feel very sorry for those that though 5% or less is the norm and in consequence, based their mortgage borrowings on the same. Tbh, I know a number of folk that will be in the cart should we see a return to the historical norm, around 8% BOE base rate.

Dithering_Dad

lostinrates wrote: »

ETA: DD might remember we resolved some 'misunderstandings' via PM. I am appreciative that our communication is now supportive and mutually respectful. It doesn't mean we always agree, but I think its fair to say we always hear/read each other out.

Just as an addendum to your PM statement...

I get a lot of PMs from people who either make statements to support my posts or to ask me questions/advice around the subjects I discuss. For example, I've received PM from three people already today discussing pensions, mortgage overpayments and fixed rate mortgages. Most of these people send PMs rather than post into the threads because they're afraid of the backlash they might receive in this particular forum.

They inform me that they're afraid to respond directly to my posts due to the "baggage" I seem to have on this forum or because their punctuation/spelling/grammar or language skills might not be up to the standard that many of the Pendants of this board demand or due to the latent (and not so latent) racism, sexism and anti-disability/anti-benefits atmosphere that permiates this board.

I'm happy to receive the PMs and delighted if my advice is of any use, but I find it annoying that some people are excluded from participation on the boards due to the pedantic educational eliteists, racists, bullies, etc.

Shame really, but there you go.

lostinrates

Dithering_Dad wrote: »

Just as an addendum to your PM statement...

I get a lot of PMs from people who either make statements to support my posts or to ask me questions/advice around the subjects I discuss. For example, I've received PM from three people already today discussing pensions, mortgage overpayments and fixed rate mortgages. Most of these people send PMs rather than post into the threads because they're afraid of the backlash they might receive in this particular forum.

They inform me that they're afraid to respond directly to my posts due to the "baggage" I seem to have on this forum or because their punctuation/spelling/grammar or language skills might not be up to the standard that many of the Pendants of this board demand or due to the latent (and not so latent) racism, sexism and anti-disability/anti-benefits atmosphere that permiates this board that I they say prevents them from posting.

I'm happy to receive the PMs and delighted if my advice is of any use, but I find it annoying that some people are excluded from participation on the boards due to the name-calling (I've been called 'stupid', a 'liar' and 'selfish' just on this thread alone) and bullying.

Shame really, but there you go.

re spelling etc. Well, I've received more than my fair share of aggression over this. There are several poor spellers/dyslexics/other literacy probelems all over MSE I think its sad that people feel unable to post, but lots of we illiterates do. My posts were all over the place yesterday. I'm not sure how they are today TBH. Head is spinning, so posts probably are too! All that said, although I find some of the harsher posts directed at me a little breathcatching, I deal with them. It is after all me making the mistakes.

re insults. They fly all ways...I don't think you are the most singled out in fact, but there are certain posters whose opinions are always weighed down by the insults or sock puppet talk. Its bloody annoying, but its not a one way issue. Regrettably. If it were maybe we could get the board guides/abuse or whoever to sort it out.

blakester

lostinrates wrote: »

re spelling etc. Well, I've received more than my fair share of aggression over this. There are several poor spellers/dyslexics/other literacy probelems all over MSE I think its sad that people feel unable to post, but lots of we illiterates do. My posts were all over the place yesterday. I'm not sure how they are today TBH. Head is spinning, so posts probably are too! All that said, although I find some of the harsher posts directed at me a little breathcatching, I deal with them. It is after all me making the mistakes.

re insults. They fly all ways...I don't think you are the most singled out in fact, but there are certain posters whose opinions are always weighed down by the insults or sock puppet talk. Its bloody annoying, but its not a one way issue. Regrettably. If it were maybe we could get the board guides/abuse or whoever to sort it out.

I agree,
I have been lurking on this post but chose not to get involved in the overall "debate". There have been some very good points on this thread. My opinion FWIW, is that peeps on here need to be a bit more tolerant of individuals. As DD mentioned in an earlier post, it takes all sorts to make the world. Hey, if someone doesn't use correct grammar or there are spelling mistakes, let it go. I think different strokes for different folks we don't really know the individual behind the keyboard. Tolerance! its the way forward. Good post lir and also to DD