Base rate rises - mortgage decision

graham17_2

Hi,

I had posted in another thread about which co-op mortgage to choose - fixed or capped tracker.

Just wanted to ask this question in another thread to help me make my decision as I really should decide soon, within the next 2 hours before I see the bank :-)

What is the general opinion on when rates will rise and by how much?

I'm trying to decide as if the base rate goes to 2.5% or more, then I start losing out compared to the normal fixed. I'm trying to make up my mind on mortgage as if it happens early within the 5 years, it makes sense to go for the fixed, but otherwise, possibly the capped tracker.

Look forward to hearing people's opinions :-)

Thanks,

Graham.

yelf

I expect no change for another year, then gradual increase. maybe to 3% with in 3 years

RufusA

The simple answer is no-one knows.

There are too many factors to predict with any degree of certainty, and no-one really knows how much impact the quantive easing will have in the medium term. To my mind QE is like a bath, you can keep adding water to a point, and the overflow will handle it. Add too much, and it spills over the side and causes a huge mess.

For an economist's prediction, the Clutton's residential property forecast has some nice tables - see page 2. Probably inline with my thoughts:

http://www.cluttons.com/clientUpload/researchIssue/Cluttons%20Residential%20Forecast%20-%20August%202009.pdf

Low interest rates for the next couple of years, returning to 4%+ by 2012.

I did see a treasury forecast which had similar BoE rates predicted up to 2011. It did however also show significantly lower "5 year" swap rates for next year (rising again in 2011/12), which may imply there will be some cheaper borrowing available for mortgage providers to lend to those with a good risk profile.

Rufus.

Euphoria1z

so if your looking for fixing for say 5 yrs, would one suggest fixing next yr in 2010, or yr after 2011? not sure i understood the above post.

Bojangles_3

RufusA wrote: »

The simple answer is no-one knows.

There are too many factors to predict with any degree of certainty, and no-one really knows how much impact the quantive easing will have in the medium term. To my mind QE is like a bath, you can keep adding water to a point, and the overflow will handle it. Add too much, and it spills over the side and causes a huge mess.

For an economist's prediction, the Clutton's residential property forecast has some nice tables - see page 2. Probably inline with my thoughts:

http://www.cluttons.com/clientUpload/researchIssue/Cluttons%20Residential%20Forecast%20-%20August%202009.pdf

Low interest rates for the next couple of years, returning to 4%+ by 2012.

I did see a treasury forecast which had similar BoE rates predicted up to 2011. It did however also show significantly lower "5 year" swap rates for next year (rising again in 2011/12), which may imply there will be some cheaper borrowing available for mortgage providers to lend to those with a good risk profile.

Rufus.

I think you are correct. You have confirmed what was in my better judgement, but I allowed my Mrs and our mortgage adviser to persuade me to go for a 2 year fixed (we can't get any more than that, as it's a self-cert mortgage) of 3.99% until July 2011. We booked this rate back in June, delayed it until September. So we are in the first month and it cost us £799!

Is it too late to get out of this ridiculous deal?

HELP!!!!

inspector_monkfish

graham17 wrote: »

Hi,

I had posted in another thread about which co-op mortgage to choose - fixed or capped tracker.

Just wanted to ask this question in another thread to help me make my decision as I really should decide soon, within the next 2 hours before I see the bank :-)

What is the general opinion on when rates will rise and by how much?

I'm trying to decide as if the base rate goes to 2.5% or more, then I start losing out compared to the normal fixed. I'm trying to make up my mind on mortgage as if it happens early within the 5 years, it makes sense to go for the fixed, but otherwise, possibly the capped tracker.

Look forward to hearing people's opinions :-)

Thanks,

Graham.

no change for another 2 yrs, possibly lower
but so many things to weigh up in the meantime

Wutang_2

Bojangles wrote: »

I think you are correct. You have confirmed what was in my better judgement, but I allowed my Mrs and our mortgage adviser to persuade me to go for a 2 year fixed (we can't get any more than that, as it's a self-cert mortgage) of 3.99% until July 2011. We booked this rate back in June, delayed it until September. So we are in the first month and it cost us £799!

Is it too late to get out of this ridiculous deal?

HELP!!!!

Help with what?...and what ridiculous deal?

inspector_monkfish

Bojangles wrote: »

I think you are correct. You have confirmed what was in my better judgement, but I allowed my Mrs and our mortgage adviser to persuade me to go for a 2 year fixed (we can't get any more than that, as it's a self-cert mortgage) of 3.99% until July 2011. We booked this rate back in June, delayed it until September. So we are in the first month and it cost us £799!

Is it too late to get out of this ridiculous deal?

HELP!!!!

thats a good deal dude
be happy:D

Bojangles_3

we were on the SVR, currently at 3.5% with no fixed tie in period and no fees.
admittedly, the 3.99% two year fixed is a good deal.
my point is, i agree with RufusA, Cluttons and a whole host of other people's views on what may happen over the next 24 months: that rates will creep up perhaps mid point next year and remain below 4% until this fixed deal ends ie July 2011.

I've done a rough calculation and with the £799 fee it costs to get on this fixed rate, we would lose around £2000 (possibly) over that 2 year period. We don't have that to lose. All for the security of a fixed rate.

We've rang to get out of the deal. At first they said no, because it's started already, but it is within the first month, so they may take a view but I have to go through my broker. (I'm not going to be popular with him!)

Bojangles_3

our broker booked a fixed rate for us in June 09. The new rate started 1st September.
On the 14th September, we asked to get out of this rate, as we were in a 30 day 'cooling off' period. Should we be allowed out of the deal? I think yes. Bank have escalated this complaint.

Anyone know the legal side of things?

corgi22

i had the same problem 5 years ago with the halifax. i am pretty sure that your rights state that any loan or loan type agreement is subject to a 14 day cooling off period. as long as you havent spent any of the assets you were given such as equity release u should be entitled. my advice is contact consumer rights or office of fair trade for more exact advice. hope this helped a little. good luck.