Interest Rates

Heyman_2

I don't think anyone can predict when Interest Rates will go up. Towards the end of last year, there were people on here saying Rates were going to head up imminently and even Tim Besley of the BofE MPC gave an interview saying he believed the next move would be up.

9 months later and rates have dropped to 0.5%.

So, as they can't go any lower, the next move will definitely be up, but no-one really knows when. Could be end of this year, could be end of next year, could be 2011 or later - depends on inflation really.

Generali

Heyman wrote: »

I don't think anyone can predict when Interest Rates will go up. Towards the end of last year, there were people on here saying Rates were going to head up imminently and even Tim Besley of the BofE MPC gave an interview saying he believed the next move would be up.

9 months later and rates have dropped to 0.5%.

So, as they can't go any lower, the next move will definitely be up, but no-one really knows when. Could be end of this year, could be end of next year, could be 2011 or later - depends on inflation really.

It's why I reckon a fixed rate at pretty generous prices historically speaking is a good idea.

Heyman_2

Generali wrote: »

It's why I reckon a fixed rate at pretty generous prices historically speaking is a good idea.

Depends on your situation. The best Fixed Rate deals out there are at lower rates but with huge fees, and only if you have 60-75% LTV generally.

Plus from what I've seen they're 2 year and 3 year deals. The longer term deals aren't much better than what they were a couple of years ago when I was looking. Fixing for 2 or 3 years now isn't a good idea IMHO.

Jim_B_3

I have this idea in my head that since the government needs plans to go into greater debt, it will need higher interest rates to make investors interested in buying all the gilts/bonds/whatever it is that they flog.

Generali

Jim_B wrote: »

I have this idea in my head that since the government needs plans to go into greater debt, it will need higher interest rates to make investors interested in buying all the gilts/bonds/whatever it is that they flog.

Also you will be competing with the Government to be able to borrow the money. Obviously the Government (with their ability to print money) is a much lower risk than Some Bloke.

confused31_2

Heyman wrote: »

Depends on your situation. The best Fixed Rate deals out there are at lower rates but with huge fees, and only if you have 60-75% LTV generally.

Plus from what I've seen they're 2 year and 3 year deals. The longer term deals aren't much better than what they were a couple of years ago when I was looking. Fixing for 2 or 3 years now isn't a good idea IMHO.

Thats the problem, in a 2 or 3 year fixed you could be searching the market in two years when the rates are really at there peak thats why you need at least a 5 year fixed rate, and hopefully then you will ride the storm out.

Ive just jumped of my current fixed rate which was ending in october 2010.

Georgie4

Dave43 wrote: »

Thanks for all your comments.

Could afford upto 7.5% - but would look to sign up on a fix.

I am currently with the Nat West and have recently renewed my deal - 2yr fixed - if I was to change my deal ( they currently have a ten year fixed ) and combine my additional borrowing into one part of the mortgage and move into the ten year fixed - would I have to pay a redemption penalty on my current deal.


Undoubtedly , even though you are staying with them - this has always been my experience anyway:mad:

CrazyHorseB

The problem at the moment with fixing for any period is predicting when its going to be high. Interest rates almost certainly won't be very high for 18 months, so there's not point in fixing for 2 years. 5 years seems a popular choice for 'riding out the storm' but if the economy stays bad for a few years then 5 years may bring you out right in the middle of when interest rates are high... so fix for longer... but it will cost you, if interest rates stay low for 4 years!

It is general assumption that interest rates will have to increase significantly at some point to combat inflation. Can someone who knows what they are talking about comment on this?

PasturesNew

Thrugelmir wrote: »

Always take a pessimistic view that way you won't be caught out. Could you afford your mortgage at say an 8% interest rate ?

8% was always considered the long-term average.
We used to be asked if we could afford it at 12%!

Thrugelmir

PasturesNew wrote: »

8% was always considered the long-term average.
We used to be asked if we could afford it at 12%!

My comment was based on current circumstances. Who knows what they'll be.