Rates to hit 2% next year.

tomstickland

I'm on a pretty shoddy fix of 6.6% for another 2 years.
Rates will probably be really high when that finishes, conveniently allowing me to miss the current low rates.
I did the sums on early exit and don't it's worth it.

Thrugelmir

arenaman wrote: »

I've read this with interest (no pun intended) and would like to ask the question would anyone here fix in for 5 years at 4.35% (£600 fee free legals) or ride the svr (2.5% currently) I'm close to the 75% LTV and may slip over the threshold if house prices fall further (are house prices falling or rising? there's conflicting reports) I posted this in another section but there seems to be different posters here and it's relevant so opinions would be appreciated

Your choice. There's no correct answer.

Personally I would take the low SVR and pay down the mortgage as fast as possible ( or save as much as possible in a Corporate bond ISA which should yield a higher rate than the mortgage) until the situation changes. Ultimately using the ISA to pay off the mortgage with a lump sum.

mewbie_2

Thrugelmir wrote: »

Corporate bond ISA...

When do you think the tide will turn against Bonds?

Thrugelmir

nembot wrote: »

The reality is Labour have to keep rates low, in order to get another term (unlikely I know) whereas the Tories may just say "they're forced to increase rates" and subsequently blame the resulting chaos on economic mismanagement under Brown, how easy would that be to spin.

People have already become complacent about low interest rates, if they went up significantly, well who knows... but you can see what happened last time.

Capital markets will determine UK borrowing interest rates. As the UK needs to borrow huge sums of money in the next few years.

The BOE will adjust base rate to control inflation.

Unfortunately the Government of the day will have little direct control over interest rates.

Best hope is that £ falls further against the Euro and the $.

Thrugelmir

mewbie wrote: »

When do you think the tide will turn against Bonds?

Best of the market is over. Like shares, Corporate Bonds fell in price last year. Prices have recovered signficantly aided by the BOE using QE to buy CB's from financial institutions. In last 5 auctions no CB's were offered to the BOE. So institutions happy to hold them currently rather than taking the cash.

Good yields are still available though. I'm averaging just under 9% in my ISA now. Built on holdings in Glaxo, Vodaphone , Marks & Spencer, to name a few. So quality companies unlikely to default on their interest payments. Reinvesting the income so all compounding nicely.

The longer the base rate stays low the better. As the bonds are getting closer to redemption as well, the risk of capital loss progressively diminishes.

Downside for bonds, must be if interest rates move up fast and high.

steve237

arenaman wrote: »

I've read this with interest (no pun intended) and would like to ask the question would anyone here fix in for 5 years at 4.35% (£600 fee free legals) or ride the svr (2.5% currently) I'm close to the 75% LTV and may slip over the threshold if house prices fall further (are house prices falling or rising? there's conflicting reports) I posted this in another section but there seems to be different posters here and it's relevant so opinions would be appreciated

I'd fix.

4.35% is a great rate for 5 years. As soon as the base rate rises by 2% - which I think it will within 2 years - your gamble has paid off.

I just fixed for 7 years at 5.39% (78% LTV, £125 fee)

IveSeenTheLight

mewbie wrote: »

It would be triple the interest some people on trackers are currently paying. Ouch!

It wouldn't be more than they were paying when they agreed the mortgage

wolvoman

mewbie wrote: »

It would be triple the interest some people on trackers are currently paying. Ouch!

Yep my monthly mortgage would go from 27% of my take home to 34%.
Very ouch.


In 2007 I was paying 49%

IveSeenTheLight

wolvoman wrote: »

Yep my monthly mortgage would go from 27% of my take home to 34%.
Very ouch.


In 2007 I was paying 49%

Mewbie, I hope this is hitting home with you today.

Three times, you make brash comments without any real thought or research into the facts and three times, you've been proven wrong.

Sometimes its better to think before speaking (typing)

tek-monkey

wolvoman wrote: »

Yep my monthly mortgage would go from 27% of my take home to 34%.
Very ouch.


In 2007 I was paying 49%

Just on the mortgage? Mine will be about 35% which is bad enough!