MSE News: Is it time to fix your mortgage?

Gorgeous_George

stueyhants wrote: »

It's an assumption based on the facts of several years ago, just before the mortgage market imploded. I'm not saying SVRs will move by the same % as Base rates, but likewise I think it's unrealsitic to expect a 'return to normal' SVR rate considering the funding gap coming up over the next 5 to 10 years.

BofE Base Rates of 5%+ will indicate a 'return to normal'.

The SVR/Base Rate difference doesn't plug any funding gap.

I once paid 16.5% when Base rates were 15%. That wasn't normal either.

In the end, we all must make our own choice.

Interesting (or scary) that 4 out of 5 of the experts in MSE's 'News article' (or advert as I prefer to call it) are mortgage brokers. Shameful.

GG

VIGILANT22

[QUOTE=Gorgeous_George_Interesting_(or_scary)_that_4_out_of_5_of_the_experts_in_MSE's_'News_article'_(or_advert_as_I_prefer_to_call_it)_are_mortgage_brokers._Shameful._GG[/QUOTE]

GG.....Why is it shameful? As far as I can see/read it is a discussion thread and they have asked the opinion of those in the market.....I would imagine if it had been a discussion on food they would have asked nutrionists or a medical condition.. doctors..

Gorgeous_George

But instead they asked salesmen.

It's like asking Tesco if we should stock up on food. Or the pharmaceutrical industry if we should fund all medicines free on the NHS.

Mortgage brokers sell mortgages - the clue is in the name. Of course they want you to fix. Anything to spark a little life into a quiet business.

I think it is shameful that Martin's wonderful website is giving these salesmen free advertising.

GG

wymondham

These short term artifical rates will end soon. Anyone buying on SVR during these extrordinary times will be very exposed once rates return to normality.

getmore4less

Gorgeous_George wrote: »

But instead they asked salesmen.

It's like asking Tesco if we should stock up on food. Or the pharmaceutrical industry if we should fund all medicines free on the NHS.

Mortgage brokers sell mortgages - the clue is in the name. Of course they want you to fix. Anything to spark a little life into a quiet business.

I think it is shameful that Martin's wonderful website is giving these salesmen free advertising.

GG

Thing is if you read the answers carefully they are far from saying FIX NOW.

Reading again far from it.

More like fix if you have to but wait a bit, otherwise track it's cheaper.

Peelerfart

So the people who are urging all to fix. They were all here twelve months ago urging people to - yes you've guessed it,fix.

Was it good advice then ? Is it good advice now ? I agree with getmore4less, overpay. Don't pay the fees the salesmen want you to until you have to, if ever.

getmore4less

wymondham wrote: »

These short term artifical rates will end soon. Anyone buying on SVR during these extrordinary times will be very exposed once rates return to normality.

Only those that decided to spend the money

Those that carried on paying as if they were at a higher rate have reduced their exposure by having a much smaller mortgages.

VIGILANT22

Gorgeous_George wrote: »

But instead they asked salesmen.

It's like asking Tesco if we should stock up on food. Or the pharmaceutrical industry if we should fund all medicines free on the NHS.

Mortgage brokers sell mortgages - the clue is in the name. Of course they want you to fix. Anything to spark a little life into a quiet business.

I think it is shameful that Martin's wonderful website is giving these salesmen free advertising.

GG

I think you're underestimating the job an adviser does. (The clue is in the name) They are not salesman, they are advising. The job of an adviser extends more than arranging a mortgage, they want to ensure the client is in a position where they're not at risk. It is not just a case of buying a house or remortgaging...it is also to ensure they are in a position to keep that property....

Chrismaths

It seems the gist of the article is tracker=cheaper, fix=peace of mind, but that's a gross oversimplification. So here's a more complex view from an investment manager (not a mortgage guy).

Firstly, if you are on a tracker or SVR, you need to work out the margin you are paying over base rate - simple enough, just take 0.5% off what you are paying. This is the margin you are paying.

Now for 5 year fixes, to work out the margin you need to take a fee-free 5 year fix and subtract what's called the 'swap rate' (available here). Now a cursory google suggests that you are likely to be paying about 5.5% on a 5y fix at the moment (a lot more if you don't have 25% equity). The swap rate is about 3.05, so current fixes are on a margin of a shade under 2.5%.

So if the margin on your current loan is less than 2.5%, (so the rate is less than 3%, you will be increasing the profits of your bank, and perhaps doing your patriotic duty by taking the burden of the rest of us taxpayers

However this still leaves the problem that some people who have a cheap tracker require insurance against interest rates rising too far - so what they really need is something that does this without them needing to remortgage and lock themselves into an expensive new mortgage.

The first thing that springs to mind is an interest rate cap (which pays any interest payments you have over a fixed level) - which it is possible to purchase separate from your mortgage. However I'm not sure of anyone who arranges these for retail clients. Another quick google yielded this but I've no idea if they are reputable or how expensive they are.

But it seems a much better way of getting that insurance without changing your mortgage - this could be especially important to people who don't have 25% equity but do have a cheap tracker mortgage. Interest rates on a 5 year fix at 90% LTV are over 7.25% WITH a whacking fee - that's would take some ridiculous level of interest rate rises before you were likely to break even.

Just a thought anyway.

Gorgeous_George

I referred to mortgage brokers and never mentioned advisers.

An adviser with a vested interest is a salesman IMHO.

Anyway, I'm off to see my real ale adviser down at the beer belly building society's local office.

I believe it was advisers that sold endowment policies.

GG