How long at 0.5%

julieq

Well done DD, that's exactly what I advised you to do a couple of days ago.

Try the roulette thing too.

space_rider

Well it can stay at 0.5 for me until 2013 when my tracker runs out as I`m paying 1.54. I am saving the difference between that rate and the rate it was in October so I don`t get used to paying such a low amount.

tomterm8

julieq wrote: »

On the subject of interest rates.

I agree that you can look at a fixed rate deal as a derivative, but I think most people who consider a fixed rate deal look at it as an insurance policy. People are paying a premium to remove the credit risk from their mortgage for a period. Fixed rate deals are normally quite expensive, but if you know you can afford the monthly repayment, there is much lower risk compared to a tracking mortgage.

On average, in an insurance setting the insured should always put in more money than they take out...

Generali

Dithering_Dad wrote: »

I'm the same - I wish I'd gone for this deal before it was withdrawn but I would have ended up with a hefty redemption charge that would have wiped out the gains made from having the fix.

My plan is to keep blitzing my mortgage and to fill my offset account so that if all the decent deals have gone by next April (when my current deal runs out), my mortgage will be significantly lower and so should not be overly impacted by higher rates.

TBH old boy, I think that's the way forward. Prices are unlikely to be heading North any time soon in the UK and yields may well come under further pressure.

Dithering_Dad

Generali wrote: »

TBH old boy, I think that's the way forward. Prices are unlikely to be heading North any time soon in the UK and yields may well come under further pressure.

I think most experts reckon BoE rates will stay at 0.5 for the rest of this year, though this doesn't necessarily mean that the mortgage providers will follow suit. Had I been on an SVR I would have jumped at the A&L rate and be sat here now with a five year fix, without a care in the world.

With the redemption penalty I have in place, it prevents me from getting any deal, no matter how good it is because I'll have to repay £4500, which wipes out the advantage of fixing, especially given that current offerings have fees in the £900 range.

I'm lucky in that I have a highly paid job, I've got a windfall from closing my company and I'm in the Mortgage Free in Three (yrs) challenge which means I've already reduced my mortgage by £45k and expect to do the same again this year. Not everyone is this fortunate and they'll be feeling the pain when rates go through the roof.

The era of cheap credit is ending - anyone who thinks that we'll have 'business as usual' once we get out of recession is fooling themselves. We've had a decade of cheap credit funded by the banks and we'll have 18 months worth of credit funded by the tax payer, take advantage of this short-term 'calm' period because we're just in the eye of the hurricane and worse is yet to come for home owners.

sabretoothtigger

Julie that roulette strategy will still turn a profit for the casino eventually because the house wins when it lands on the 1 green square.
It does sound less risky then no strategy at all though. You might need alot of money, if it happens to land on red ten times in a row then you would need to place 5000 on every spin even if you had started at 5.

I dont know what the odds of red ten times is (50% ^10 or something) its slim but not impossible, whatever the figures are they will have been written down centuries ago

http://en.wikipedia.org/wiki/Probability_theory

I reckon people would be better off applying the same thinking to share price movements, people do I think with options


http://muslim-investor.com/mi/chess-grain.phtml

http://en.wikipedia.org/wiki/Wheat_and_chessboard_problem

^^ Technology business is exponential, you are better off taking bets on that imo as the odds are in your favour

the numerous even-money bets in roulette have inspired many players over the years to attempt to beat the game by using one or more variations of a Martingale betting strategy, wherein the gamer doubles the bet after every loss, so that the first win would recover all previous losses, plus win a profit equal to the original bet. This betting strategy is fundamentally flawed in practice and the near-universal long-term consequence is a large financial loss.

http://en.wikipedia.org/wiki/Roulette#Betting_strategies_and_tactics

http://en.wikipedia.org/wiki/Martingale_(roulette_system)

The strategy had the gambler double his bet after every loss, so that the first win would recover all previous losses plus win a profit equal to the original stake

so in the above example the gambler might risk 5000 and make £5 profit if lucky

julieq

Sorry, should have festooned my post with idiot grin smileys. I know it doesn't work, I think I said in the original post on roulette that the game is set up so the house can't lose. Unfortunately I come from an age where irony was not indicated by emoticons, often have a little difficulty with that

Generali

Dithering_Dad wrote: »

I think most experts reckon BoE rates will stay at 0.5 for the rest of this year, though this doesn't necessarily mean that the mortgage providers will follow suit. Had I been on an SVR I would have jumped at the A&L rate and be sat here now with a five year fix, without a care in the world.

With the redemption penalty I have in place, it prevents me from getting any deal, no matter how good it is because I'll have to repay £4500, which wipes out the advantage of fixing, especially given that current offerings have fees in the £900 range.

I'm lucky in that I have a highly paid job, I've got a windfall from closing my company and I'm in the Mortgage Free in Three (yrs) challenge which means I've already reduced my mortgage by £45k and expect to do the same again this year. Not everyone is this fortunate and they'll be feeling the pain when rates go through the roof.

The era of cheap credit is ending - anyone who thinks that we'll have 'business as usual' once we get out of recession is fooling themselves. We've had a decade of cheap credit funded by the banks and we'll have 18 months worth of credit funded by the tax payer, take advantage of this short-term 'calm' period because we're just in the eye of the hurricane and worse is yet to come for home owners.

I've put a couple of posts on here about Aussie BTL being good in very specific circumstances. The reason is that I think that plenty of good investment returns will be from those that give a good income while being an inflation hedge rather than being big capital gainers. The reason? just about every asset market (including Govt bonds) has had a huge boom.

sabretoothtigger

julieq wrote: »

Sorry, should have festooned my post with idiot grin smileys. I know it doesn't work, I think I said in the original post on roulette that the game is set up so the house can't lose. Unfortunately I come from an age where irony was not indicated by emoticons, often have a little difficulty with that

opps I didnt read the first post but you almost had me convinced