LIBOR still dropping...

inspector_monkfish

luckyfool wrote: »

Given that base rate is at 0.50%, there is limited upside to a tracker just now (0.50% potentially), on the other hand a reasonable medium to long term average for base rate is lets say 5%. If you are tieing in just now on a tracker at 2.5%-3% over base rate (and paying a fee for the privilege), then I would suggest that it is a relatively risky thing to be doing.


Just because some people took 5 year fixed rates a year or more ago and rates have come down since then doesn't change whether or not it was the right decision for them at the time. I get the impression from some people who are plugging the benefit of staying on variable rates or taking trackers, and trying to discourage people who are clearly worried about long term rates and their ability to afford their mortgages going forward from taking long term fixed rates, that they are effectively saying don't bother insuring your house/car, its a waste of money, it probably won't get stolen/burnt down. Not everyone can afford to take that kind of gamble and for alot of people a medium to long term fixed rate at or below what is historically a very good rate (lets say 4.5-5%) makes alot of sense. It might not be right for you, but it's the right decision for alot of people imho.

to be fair though, with base rate at 0.50%, it is totally rewriting history

these are unpresedented times...

luckyfool

inspector_monkfish wrote: »

to be fair though, with base rate at 0.50%, it is totally rewriting history

these are unpresedented times...

True.
Don't get me wrong, I think if you are on an SVR of 2.5% or a tracker at 2.5-3% just now, you will probably pay less over the next 5 years than someone on a 5 year fixed rate of 4.69% lets say. Having said that if rates do go up, its quite easy to see them rising quickly back up to 4-5%, which would put people on trackers up at 6-9% in that scenario. For some people those rates would just not be affordable. That's without even considering the possibility that rates could go much much higher.

If you are a gambling person, have no dependents, or have plenty of excess income so you could afford it if rates skyrocketed then fair enough a variable tracker type deal is perfectly sensible. Hell I'm on the C&G SVR of 2.5% just now and enjoying my ridiculously low payments. If I could lock in a 5 or 10 year fixed rate just now at 4.5% or 5% then I would bite the lenders hand off, unfortunately I'm not in a position to be able to do that given my current ltv of 90-100%.

My concern is that waiting is not sensible for some people who want a long term fixed rate, but might currently be on the borderline of qualifying for the best rates at 60%, or more importantly 75% just now, and by waiting they could experience further house value declines and find that even if they desperately want a long term fixed rate in 12 months time they might not qualify, or not at remotely competitive rates. e.g. from memory the best 5 yr fixed rates at 75% now are around 4.5-4.6% for remortgagors, while at 85% those rates are nearly 6%.

foreversummer

luckyfool wrote: »

If you are tieing in just now on a tracker at 2.5%-3% over base rate (and paying a fee for the privilege), then I would suggest that it is a relatively risky thing to be doing.

Quite agree. I think the OP's original comments were about fixed rates.

luckyfool wrote: »

Just because some people took 5 year fixed rates a year or more ago and rates have come down since then doesn't change whether or not it was the right decision for them at the time.

Absolutely. I am talking about people who were panicked into a fixed rate when otherwise an alternative product might have been more suitable for their circumstances.

luckyfool wrote: »

I get the impression from some people who are plugging the benefit of staying on variable rates or taking trackers, and trying to discourage people who are clearly worried about long term rates and their ability to afford their mortgages going forward from taking long term fixed rates, that they are effectively saying don't bother insuring your house/car, its a waste of money, it probably won't get stolen/burnt down. Not everyone can afford to take that kind of gamble and for alot of people a medium to long term fixed rate at or below what is historically a very good rate (lets say 4.5-5%) makes alot of sense. It might not be right for you, but it's the right decision for alot of people imho.

You seem to be missing the point I was trying to make. Obviously everyone's circumstances are different and what suits one person will not suit another. The point I was trying to make is that in these unprecedented times cool, clear thinking is required. Knee-jerk reaction to everything you see and hear in the press, on these boards etc is not helpful. Choosing a mortgage is such a huge decision and for many it is quite an ordeal. Most people would benefit from a calm, reasoned approach.

Foreversummer

clairehi

luckyfool wrote: »

My concern is that waiting is not sensible for some people who want a long term fixed rate, but might currently be on the borderline of qualifying for the best rates at 60%, or more importantly 75% just now, and by waiting they could experience further house value declines and find that even if they desperately want a long term fixed rate in 12 months time they might not qualify, or not at remotely competitive rates. e.g. from memory the best 5 yr fixed rates at 75% now are around 4.5-4.6% for remortgagors, while at 85% those rates are nearly 6%.

thats a well-made point which I completely agree with....we are currently enjoying a base rate tracker but have a large mortgage so v sensitive to rate rises and decided to look at fixing again.

like many others we had no idea just how far lenders valuations had fallen. we had the house valued for re-mortgage and it came in at 72% ltv so we just scraped into the category for a good 5 year fixed rate.

obviously panicking is never helpful, but taking a long time to make a decision could mean you lose out as well.

if we had waited a month or two we may well have come out the wrong side of 75% and then a fix would be much more expensive.

dunamis

Thanks for all the replies and points. Some interesting factors have been raised - many of which I agree with. Issues such as the LTV in a falling price market are very important for those near the border rates like 60% and 75%.

The main thrust of my original post was really focussed on the availability of good fixed rate deals rather than the package of factors that each person has to consider as best for them.

Looking purely at the likelihood of good fixed rate deals - I just can't see why there should be good or better deals than the A&L one given all the factors of a continuing drop in the LIBOR, an ongoing recession and ongoing quantitative easing.

RG

hearts

Quote:
Originally Posted by luckyfool
If you are tieing in just now on a tracker at 2.5%-3% over base rate (and paying a fee for the privilege), then I would suggest that it is a relatively risky thing to be doing.

Quite agree. I think the OP's original comments were about fixed rates.

I also agree. I wouldn't touch a tracker now at 2.5 or 3 above base. Just buying trouble in my opinion.

snarffie

I agree with the recent comments relating to trackers being taken out today are very risky indeed, considering the fact that the base rate isn't goind to go any lower (theoretically 0.5% lower, but not really worth considering). A base rate tracker at 2.5% over BOE puts you into 3% territory, and the best 5 year fixes are at 3.99%. To me, it's a no-brainer...the fix is the way to go.

It becomes more tricky if you are already on the svr or an existing tracker. I am on a lifetime 0.73% now and I need to weigh up the pros and cons of 'twisting' with a 5 year 3.99% fix/£1k fee/£400 extra every month, or sticking with my tracker. If rates start moving up quickly, and I wouldn't be surprised to see 5 year fixes at 5.99% (at least) in a 12-18 months, my £400 saving could turn red very quickly.

I'm going to stick for now, because I think that every vested interest is lying through their teeth right now to screw the general public, and I want to see some evidence of rate rises before I consider jumping. A bunch of banks putting up tempting offers and then withdrawing/eroding them does not suggest any changes in the market to me and I won't make a knee-jerk reaction.

Just be careful, don't restrict yourselves to reading one source (ie the msn forum ), get as much info as possible to form a general opinion of your own. Make sure you understand the source of any new news/info/advice because the source often explains the skew of an article.

Good luck (because that's basically what you'll need to get it bang on!)

snarff.

---

This is my opinion, and I'm not changing it, unless somebody comes up with something better

inspector_monkfish

Good Morning all.

For what its worth, I am a Depo Trader in the London InterBank Sterling Cash Market. I also fix LIBORs for the Bank I work for.

Trust me. Sterling rates are certainly not going any higher in the foreseeable future!

Our estimates here are that we got at least another 12mths down at these levels.

michael1983l

inspector_monkfish wrote: »

Good Morning all.

For what its worth, I am a Depo Trader in the London InterBank Sterling Cash Market. I also fix LIBORs for the Bank I work for.

Trust me. Sterling rates are certainly not going any higher in the foreseeable future!

Our estimates here are that we got at least another 12mths down at these levels.

No disrespect but it was bankers foresight or lack of that got us in this mess in the first place, so what makes you so sure and why should we trust a single word that comes out of bankers mouths these days?

Trying_to_be_good

inspector_monkfish wrote: »

Good Morning all.

For what its worth, I am a Depo Trader in the London InterBank Sterling Cash Market. I also fix LIBORs for the Bank I work for.

Trust me. Sterling rates are certainly not going any higher in the foreseeable future!

Our estimates here are that we got at least another 12mths down at these levels.

michael1983l wrote: »

No disrespect but it was bankers foresight or lack of that got us in this mess in the first place, so what makes you so sure and why should we trust a single word that comes out of bankers mouths these days?

Perhaps a bit harsh, tarring all 'bankers' with the same brush?! I think it's good everyone contributes to the forum, and I'll add this opinion to all the others I read on here.

Personally, still looking to fix before too long.