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

Graham_Devon

Dithering_Dad wrote: »

Hi Graham.

If you put down a decent deposit, you won't be in negative equity, especially if you also use the current economic depression to negotiate a further discount from a seller. I'm really talking to the many people on here who have large enough deposits to secure a 75% or even 60% LTV and who can therefore command the better fixed interest rate deals.

Have a pop over to the mortgage board, they have a thread running the about fixed rates and are finding some great deals. The best ones I found for my LTV was a 5 year fix at 4.79% or a 7 year fix at 4.97, which are pretty good rates even without the fear of future double digit rates. These mortgage are with the Woolwich. They also allow 10% (for 5 yr) and 5% (for 7 yr) overpayments, which is very important for me as I still have the MFW bug.

There seems to be general agreement with most economists and even between the bears and bulls of this board, that the housing crash will continue, but at a much slower rate. If people want to wait a further 3 or 5 years before the bottom is reached, then I admire their fortitude, but as a family man I couldn't wait this long, especially if I had been waiting several years already.

If people don't want to wait for a further 3 or 5 years, then I advise them to buy soon and arrange a fixed rate mortgage.

I'm not being a bear or a bull, nor a 'crash denier'. I am simply advising others what I intend to do myself. As soon as I can I will be arranging a fixed rate mortgage (probably 7 years) to protect myself.

This is no different from 2 years ago when I was worried that the crazy house prices and indebtedness of the UK population (and government) would all end in tears. I advised people to embark on a period of mortgage overpayment to protect themselves (I followed my own advice). Some people pooh poohed me and told me they could get better returns in stockmarket investments, other people agreed with me and joined the Mortgage Free support group I started. I'll let you guess which group of people are financially better off two years later (oh, ok I'll give you a clue - not the ones who invested their money in a stockmarket that was at 6500 and is now at 3900 .

Ahhhh, well that differes from your first post which stated "urge people who are desperate to buy a house to do it sooner rather than later".

I DO see where you are coming from in this case, where actually, they probably are not desperate to buy if they have those reserves of cash available to put that amount of deposit down.

Ulfar

I personally think interest rates are going up soon and fast.

My reasons for thinking this are as follows

Inflation has gone up on both the RPI and CPI figures this month, RPI was -0.1% last month it is now nil. This is before we even see any impact of quantitative easing.

The only thing keeping these measures of inflation below double figures are houses and clothing.

Clothing has decreased in price in large part to discounts offered over the last 3 months as retailers are desperate to get customers in and winter stock sold. There is also the factor of a lot of clothing retailers going bust.

Housing well that is going to keep on going down as there is no money to lend. If by some miracle the housing market were to improve that would remove the huge negative that is dragging down RPI, this will feed back into interest rate rises.

Retailers when they have to restock are going to be subject to huge amounts of inflation on goods, we are already seeing this on food which doesn't have a long lead time for price rises to feed through.

Dithering_Dad

ad9898 wrote: »

Sound advice if you have a mortgage, forget trackers, the boat was missed their last year. Fixed rates are where it's at now.

Totally agree. My current mortgage is an SVR discount and cheap as chips. The 'bear' in me knows that this cannot possibly continue, and that there will be a reckoning. Hopefully I will be able to arrange a new mortgage before the BoE rates sky rocket. My mortgage overpayments will also help protect me from high interest rates too.

Dithering_Dad

Graham_Devon wrote: »

Ahhhh, well that differes from your first post which stated "urge people who are desperate to buy a house to do it sooner rather than later".

I DO see where you are coming from in this case, where actually, they probably are not desperate to buy if they have those reserves of cash available to put that amount of deposit down.

Sorry Graham, I've been on this board for ages now and it seems that most of the prospective FTBers here have tens of thousands of pounds in their house buying pots and have been waiting for a good couple of years or so for house prices to fall - hence my original pitch. By subscribing to this forum, most people are desperate to buy (once prices reach their levels) - why else would they be so interested in house prices?

If there are any people wo don't have large deposits reading this thread, a couple of minutes googling would be sufficient to tell them that a decent fixed rate is beyond their means.

As I keep banging on in here, make decisions (including whether or not to get a fixed rate mortgage) based on your own circumstances and do your own research. If buying now with a large deposit and getting a good fixed rate makes more financial sense than buying later and paying a higher mortgage rate, then go for it. If it doesn't then wait.

ad9898_3

Dithering_Dad wrote: »

t there will be a reckoning.

Indeed there will, my bet is after the next election, Brown has lost now anyway, however if he were to put rates up before the election, his own MP's would lynch him.


Edit....By the way DD you didn't thank my previous post you quoted , drums fingers waiting.:D

Dithering_Dad

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...

Dithering_Dad

ad9898 wrote: »

Indeed there will, my bet is after the next election, Brown has lost now anyway, however if he were to put rates up before the election, his own MP's would lynch him.


Edit....By the way DD you didn't thank my previous post you quoted , drums fingers waiting.:D

lol, sorry ad. I missed that one. I always thank people who contribute to my threads, well except the idiots like the guy who made post #2. People might disagree with me and I'm really happy for their input and addition to the debate (and they'll get a 'thanks' for their effort) but personal abuse isn't useful to anyone and just serves to make the abuser look stupid.

Edit: just to add to the 'abuse'thing. Good old Graham_Devon thinks I'm totally wrong and disagrees with my advice. Yet he simply posts a well constructed counter argument in order to put across his opinion and add to the debate, no personal abuse required.

I have a lot of time for people like yourself, graham, generali, lostinrates, silvercar, dopester, cleaver, dan:, pobby, conrad, Davesnave, mewbie, jonnybravo, tomstickland and others. The rest are just prats who are put on ignored and forgotten about.

mark55man

I agree with DD. My judgement (remortgage due in August) is that I will apply in the next 2 months - I feel there may be a slight drop as the quantitative easing puts a bit more money in the economy and before inflation hits.

For me the balance is how much I would pay over the SVR or tracker rate against the risk of higher rates (and payments) at the end of the period. I rate the risk as high, because the banks are offering capped mortgages but only for 3 years - clearly implying after 3 years you would be toast on that sort of scheme

Leeds are offering 4.75% on 10 year fix (65% LTV & about £1000 on fees or stuff). very tempted (as a remortgage with 13 years to go) this would mean I would have so little interest at the end of the period that I could afford pretty much any rate.

A&L are offering 3.99 for 5 years (see http://forums.moneysavingexpert.com/showthread.html?t=1530781 for some other 5 year recs)

look also at http://forums.moneysavingexpert.com/showthread.html?t=1157173 for a great mortgage comparison spreadsheet.

Dithering_Dad

mark88man wrote: »

Leeds are offering 4.75% on 10 year fix (65% LTV & about £1000 on fees or stuff). very tempted (as a remortgage with 13 years to go) this would mean I would have so little interest at the end of the period that I could afford pretty much any rate.

You could always change the term of your mortgage from 13 years to 10 years to coincide with the end of your fixed rate deal. Obviously your monthly rate will be increased with a shorter repayment period, but it'll be a fixed amount so easy to budget into your household finances.

This is something a lot of Mortgage Free Wannabe's do - each time they negotiate their next mortgage deal, they take a couple of years off their mortgage term.

My original mortgage term has about 20 years to go. I've knocked about 7 years off that already with overpayments (see signature) and I'm seriously considering getting a 7 year deal on a 10 year repayment schedule. Fixed mortgages generally allow a 10% overpayment, so I'd be looking at being mortgage free by the end of the fixed rate period.

lostinrates

Dithering_Dad wrote: »

l
I have a lot of time for people like yourself, graham, generali, lostinrates, silvercar, dopester, cleaver, dan:, pobby, conrad, Davesnave, mewbie, jonnybravo, tomstickland .

Awe, thanks.

Mortgage talk is timely in fact. We have to relook at finacing (somethings have changed for us -not for better or worse, just different- and I think we'll be applying for an agricultural mortgage now). I feel out of my comfort zone with this and hate it.