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why have 5 year fixed rates rocketed???

confused31_2
Posts: 1,272 Forumite
I took out a 5 year fixed rate in may and the rate i got was 4.15%, at the time someone was doing a five year fixed rate at 3.99%, but i missed out on that.
Now my friend has asked me to look for the best five year fixed rate and all i can find is 5.10% with the chelsea building society, does anyone know of a better deal, the friend i know as a 25% deposit.
What im struggling to get my head round is, how can banks expect people to borrow at these high rates, the bank of england rate is still at 0.5% and the libor rate is still low.
So why are the banks charging these high rates for 5 year fixed mortgages??
Now my friend has asked me to look for the best five year fixed rate and all i can find is 5.10% with the chelsea building society, does anyone know of a better deal, the friend i know as a 25% deposit.
What im struggling to get my head round is, how can banks expect people to borrow at these high rates, the bank of england rate is still at 0.5% and the libor rate is still low.
So why are the banks charging these high rates for 5 year fixed mortgages??
I am not a Mortgage Adviser
You should note that this site doesn't check my status as not being a Mortgage Adviser, so you need to take my word for it. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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because more and more people have started buying now.. fearing its now or never..postive signs everywhere (or so its projected)...bank rates can only rise..
..and the banks make hay while the sun shines?0 -
Where are these positive signs!0
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House prices have stopped falling on a couple of the indexes?
A 5 year fixed rate is based to a degree on an expectation of where rates will average over the next 5 years. Very few people think that rates will average 0.50% over that period.
Also, rates to a degree are based on competition. Lenders have raised rates to slow down business volumes after busy May/June's . . . other lenders have followed suit to avoid getting swamped with applciations and the vicious circle fed itself, with some lenders increasing their 5yr deals 3-5 times.0 -
Busy May/Junes - Justified by the fact there is 5 lenders as opposed to 200.
Rates are no longer based on competion, more what banks can get away with - Prved by Barclays posting profits and HSBC.....0 -
confused31 wrote: »...So why are the banks charging these high rates for 5 year fixed mortgages??
I think it's because the banks long term forecast for the base rate over the next five years has increased recently (don't ask me how they forecast this, but they do!) As they're now forecasting that rates will increase over the coming years, they've got to factor this into their rates they offer you to fix at now.
To my mind, it's all a bit of a game that the banks play though. ("Oh, Barclays have just got £3bn profit using these rates, we had better match them and maybe we'll make that too...")No trees were killed to send this message, but a large number of electrons were terribly inconvenienced. - Neil deGrasse Tyson (@neiltyson)0 -
Where are these positive signs!
I havent seen any either , its just the greed from the banks, they have made 6 billion according to the news but the house market as reported house prices will still fall until 2011.
Oh well i think the fixed rates will fall again after the summer, as the little spurt we have had will be over.I am not a Mortgage AdviserYou should note that this site doesn't check my status as not being a Mortgage Adviser, so you need to take my word for it. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I can understand them thinking of what rates are going to be in the future, but i got a five year fixed rate 5 years ago and it was at 4.69%.
Even if rates go up are they really going to go that high?? I dont think so infact in the last 8 years rates have never been over 5.75%, they was 6% in 2000, and the first month of 2001.
I would say the average interest rates over the last 10 years would be about 4%.
I think the banks are being well greedy and they are taking the p!ss. most 5 year fixed rate deals are well over 5.5%
http://www.tradingeconomics.com/Economics/Interest-Rate.aspx?Symbol=GBPI am not a Mortgage AdviserYou should note that this site doesn't check my status as not being a Mortgage Adviser, so you need to take my word for it. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
How many lenders were fighting over your business when you got your last 5 yr fixed rate. Lets face it, realistically there is not much competition out there and there is not enough money to lend. Hence lenders are almost rationing it and charging what the market will bear. I wish things were different as it would make my job alot easier.0
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confused31 wrote: »I took out a 5 year fixed rate in may and the rate i got was 4.15%, at the time someone was doing a five year fixed rate at 3.99%, but i missed out on that.
Now my friend has asked me to look for the best five year fixed rate and all i can find is 5.10% with the chelsea building society, does anyone know of a better deal, the friend i know as a 25% deposit.
What im struggling to get my head round is, how can banks expect people to borrow at these high rates, the bank of england rate is still at 0.5% and the libor rate is still low.
So why are the banks charging these high rates for 5 year fixed mortgages??
I must be a lot older than you. Historically these are NOT high rates - watch what happens next. Look back at the rates over the last 20-30 years and give yourself a real shock.0 -
Bob_the_Saver wrote: »I must be a lot older than you. Historically these are NOT high rates - watch what happens next. Look back at the rates over the last 20-30 years and give yourself a real shock.
High rates stopped in 1993, before that they was high, but now they are at all time low and the banks have the rates well high in comparison to the boe rate.I am not a Mortgage AdviserYou should note that this site doesn't check my status as not being a Mortgage Adviser, so you need to take my word for it. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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