INTEREST RATES - What next??

[Deleted User]

Hi all,

I'm currently on a fixed rate self-cert mortgage with Mortgage Express at 6.14%. My fixed term ends next April (2010).

In September last year I had to move out of my home and I'm now back with my parents (god bless 'em) as I was struggling to keep up with the payments and I now rent out my house. The rent covers most of the mortgage but I still pay around £450 towards it each month.

From what I gather my variable rate should be 2% above the when my fixed term comes to an end. If this is the case there's a chance I might be able to keep a hold of my house in the long-term, should the bank rate stay low.

I've been searching the web for some bank rate projections over the next year or even two but with the current climate, it's proving difficult.

I'd quite like to hear some opinions on what might happen to the rate in the next year or so. Any educated guesses??

hewsy10 (this is my first post so be gentle).

waynehayes

Well, I'm no expert, but surely the only way is up! It's just a matter of how long they stay at current levels.

sparky99_2

I've been on a variable rate of 3.65% for a few months now but I have an inkling things are going to move up, so me and my wife have just signed up to a 10 year fixed rate at 5.29% for the duration of our mortgage, this may soung silly but we can easily afford this and it is only £50 more than I was paying 15 years ago on half of what I owe now, so historically fixed interest rates are low.
Ps. The more you read the more you get confused, it seems to me know one knows whats around the corner you just have to play the odds and live with your descision.

[Deleted User]

It does seem obvious that they will begin to rise again, my concern is when?. From my point of view it would be great to see them stay low into next year at which point I might be able to fix again for a longer period at a lower rate.

It would have been great to see an interest rate cut for all mortgage customers regardless of whether you were fixed or not as I do feel a bit left out but that's wishful thinking on my part! Who knows what effect that would have had on the market. Not a good one I suspect!!

Thanks for your posts guys.

Thrugelmir

hewsy10 wrote: »

It does seem obvious that they will begin to rise again, my concern is when?. From my point of view it would be great to see them stay low into next year at which point I might be able to fix again for a longer period at a lower rate.

It would have been great to see an interest rate cut for all mortgage customers regardless of whether you were fixed or not as I do feel a bit left out but that's wishful thinking on my part! Who knows what effect that would have had on the market. Not a good one I suspect!!

Thanks for your posts guys.

Although BOE base has remained unchanged. fixed rate mortages have been creeping upwards since March. SVR's have been increased by a number of lenders too.

BOE rates are predicted to remain unchanged the end of the year. Recent forecasts have BOE base between 2% and 3.5% by end of 2010.

I would ask why you are subsidising your existing property to the tune of £450 per month. Make more sense to sell and start afresh. With the current economic situation and rationing of available mortgage funds the property market is unlikely to recover for some considerable period of time.

[Deleted User]

Hi Thrugelmir,

There's a couple of reasons I'm keeping the house at present. The first is that I'm tied in until April 2010 and an early redemption would incur a fee of over £12,000. The other reason is that I had roughly £60,000 equity in the house before the downslide and it's hard to let go of the hope that I may someday regain that equity.

I feel as though everything's hanging in the balance at the moment and didn't want to rush into a decision I'd regret. It has crossed my mind though!

My thoughts were that if I could fight off the wolves until April, the mortgage payments could go down and I could fix at a more manageable rate. Just how realistic that is, I don't know?!?!?

Thrugelmir

hewsy10 wrote: »

Hi Thrugelmir,

There's a couple of reasons I'm keeping the house at present. The first is that I'm tied in until April 2010 and an early redemption would incur a fee of over £12,000. The other reason is that I had roughly £60,000 equity in the house before the downslide and it's hard to let go of the hope that I may someday regain that equity.

I feel as though everything's hanging in the balance at the moment and didn't want to rush into a decision I'd regret. It has crossed my mind though!

My thoughts were that if I could fight off the wolves until April, the mortgage payments could go down and I could fix at a more manageable rate. Just how realistic that is, I don't know?!?!?

Mortgage Express were offering a waiver of ERC fees. The deal expires today (30th June). As ME is part of the defunct Bradford & Bingley and they are trying to get mortgages off their books.

May be worth giving them a call!

samnorris2

Thrugelmir,

on your comment ...

"BOE rates are predicted to remain unchanged the end of the year. Recent forecasts have BOE base between 2% and 3.5% by end of 2010."

I'm dropping onto the Nationwide BMR of 2.5% in August and I've been trying to lock in to a fix. The best reasonable 3 year fix I can get just now is about 4.9%.
If I compare the cost of that with staying on the variable rate for 16 months I would have paid and extra £2000 off the mortgage within that timeframe assuming the rates meet 3.5 at the end of next year.

I'm interested in the sources of the forecasts.

I'll make my own decision at the end of the day but would like to look at the info that projects a meaning forecast. If you have anything please post the links

Thanks

Sam

Thrugelmir

samnorris2 wrote: »

Thrugelmir,

on your comment ...

"BOE rates are predicted to remain unchanged the end of the year. Recent forecasts have BOE base between 2% and 3.5% by end of 2010."

I'm dropping onto the Nationwide BMR of 2.5% in August and I've been trying to lock in to a fix. The best reasonable 3 year fix I can get just now is about 4.9%.
If I compare the cost of that with staying on the variable rate for 16 months I would have paid and extra £2000 off the mortgage within that timeframe assuming the rates meet 3.5 at the end of next year.

I'm interested in the sources of the forecasts.

I'll make my own decision at the end of the day but would like to look at the info that projects a meaning forecast. If you have anything please post the links

Thanks

Sam

The figures are based on different opinions from Sundays Business Press.

1.5% is a wide spread. Really know ones knows. However the concensus is that when interest rates rise they could rise sharply.

The link between BOE base and mortgage rates appears to have been broken. As many lenders now charge a high SVR and seem to be raising their fixed rates every couple of weeks.

Personally I would watch fixed rates and fix if rates move sharply upwards over the summer.