End of the road for super-low trackers

abinanthanb

Thrugelmir wrote: »

No they wouldn't have been. They have truly benefited from the lowering of base rates though. They are rentering a world where interest rates are increasing again though with no similar mortgage product for the future.

If they haven't used the "saved" money wisely. Well its their own fault.

Soon all that will left is those with life time trackers. Which are a small minority of total mortgage holders.

My point was this... If I have taken a mortgage (starting at 5% BOE rate) and if the IR goes low, I will be happy for sure. But why will it shock me if the IR goes back to the 5% again?

Jonbvn

I would be interesting to know the split between those of lifetime trackers, and those on limited term trackers.

When we went onto a lifetime tracker last year (before the big rate cuts), I recall that lifetime trackers seemed to be very popular with the bigger lenders (HSBC & Barclays/Woolwich). [Anecdotal Only]

MissMoneypenny

abinanthanb wrote: »

My point was this... If I have taken a mortgage (starting at 5% BOE rate) and if the IR goes low, I will be happy for sure. But why will it shock me if the IR goes back to the 5% again?

I think it will be for some. I was speaking to one of the cashiers in barclays, who told me how great her fixed tracker was and that it didn't matter that her house had gone into negagtive equity, as they weren't selling. I said that will be ok as long as your keep your jobs and don't need to remortgage. She hadn't even thought about negative equity and remortgaging. When I said that some would struggle if the mortgage rate went back up to an average 7%, she looked shocked and said they could never afford that.

Really2

Thrugelmir wrote: »

Soon all that will left is those with life time trackers. Which are a small minority of total mortgage holders.

Yes with prolonged low inflation forecast, those few look like bright sparks now.;)

Trackers will come down again but not until the banks are in a better shape. In the mean time their loans will still most probably be cheaper than when they took out the products.

abinanthanb

MissMoneypenny wrote: »

I think it will be for some. I was speaking to one of the cashers in barclays, who told me how great her fixed tracker was and that it didn't matter that her house had gone into negagtive equity, as they weren't selling. I said that will be ok as long as your keep your jobs and don't need to remortgage. She hadn't even thought about negative equity and remortgaging. When I said that some would struggle if the mortgage rate went back up to an average 7%, she looked shocked and said they could never afford that.

You are missing the point. Its acceptable if someone gets shocked seeing the IR going up beyond the maximum they have paid in the past (though the example is shocking to me as she cant even afford 7% interest!!!)... But how can one get shocked seeing the IR going back to what they were paying in the past?!!

PS: I dont know how to explain what I am trying to say!

Thrugelmir

Really2 wrote: »

Yes with prolonged low inflation forecast, those few look like bright sparks now.;)

Trackers will come down again but not until the banks are in a better shape. In the mean time their loans will still most probably be cheaper than when they took out the products.

We will be lucky to see "cheap" trackers ever again. The Bank of China at 2.5% over base for lifetime. Sets the trend for future mortgages.

payless

Most of the deals that were below BoE base were 2-3 year deals, whereas the lifetime trackers were generally starting at a little above base .

Thrugelmir

payless wrote: »

Most of the deals that were below BoE base were 2-3 year deals, whereas the lifetime trackers were generally starting at a little above base .

Whats the average rate for lifetime trackers now?

wolvoman

Thrugelmir wrote: »

Before too much excitement is generated by low repossesion rates. The next move in the game will affect many.

Thousands of homeowners who have been paying the best-ever mortgage rates of 0% are braced for a huge repayment shock in the coming weeks.
They face a tough decision as to whether they should remortgage, especially after the Bank of England’s quarterly inflation report last week suggested interest rates could stay lower for longer.
Borrowers who took out “super-low” two-year tracker mortgages with Halifax, the Co-op and Birmingham Midshires in the summer of 2007 have been paying 0% on their loans since Bank rate fell to 0.5% in March. Those on Cheltenham & Gloucester’s (C&G) deal at 1.01 percentage points below Bank rate have been paying 0% since rates fell to 1% in February. However, all face a jump in repayments of as much as £8,000 a year as deals revert to standard variable rates (SVRs) as high as 4.24% this month and next.

So the same people who were paying 4.74% when they took out their mortgages in 2007, and then for much of 2008 were paying between 3.99% and 4.49% are now having to pay 4.24%?
AND had free mortgages for a few months in between.

Sorry, where is the story?

payless

Thrugelmir wrote: »

Whats the average rate for lifetime trackers now?

for new business you are looking at it starting at about 2.5% above base! ( not done a full search though) - with many providers much higher

Of course for existing term tracker customers - there are on the original deal - whilst maybe there are cheaper (perhaps if paid a bigger arr fee) I remember doing some term trackers at base + 0.17% about 2 yrs ago