Interest Rates

movieman

It may not make that much difference to fixed rates, as they've been going up for months while the BoE held rates steady. That said, I guess the banks will look for any excuse to raise further...

MortgageMamma

DavB93 wrote:

Well it's not good for me, am just looking for a fixed rate mortage now so the rates will go up. Great..

Get your skates on then!

DavB93

Was only in the planning stage and wasn't going to get it for another few months...doh don't know what to do as save £1200 on my redemption if i wait til Jan.

Joe_Bloggs

You would probably not have saved £1200 on what ever you chose. Fixed rates are more often ahead of the variable rates of central banks. You pay a premium for the fixed rate. Money market speculators are betting they can make money out of higher fixed rates as the likely underlying market rate will be lower than that offered. The speculators are taking an educated risk.
J_B.

DavB93

Thanks Joe_Bloggs, so your saying not to panic and just wait til Jan

Joe_Bloggs

With a £1200 penalty I would say yes . Are you currently on a fixed deal ? There are probably very few accurately represented deals out there at this time due to the sudden interest rate change. Keep your credit references spotless up to your remortgage period. Your easiest option is to ask your existing lender for a deal closer to the time.
J_B.

TangentMan

Just to avoid confusion.

What has been raised today is the Bank of England Repo rate (sometimes referred to as "Base Rate").

This is a variable rate set directly by the BofE and, mostly, used to control inflation / economic growth.

Any mortgage rate linked to this will change - typically "base rate trackers".
Any mortgage rate linked to a lender's "Standard Variable Rate" will also change. The amount is at the discretion of the lender. Some will pass on all the 0.25% increase, some may choose to increase their SVR by more, some possibly by less. Depends on how they want to position themselves in the market or make some money!

Fixed rates are not dervied from the BofE Repo rate. They are derived directly from the "Swap rates" in the money markets. These fluctuate on a continual basis and the lenders monitor them daily - hence why Fixed rates have changed (both up and down) independantly of the Repo rate.

Therefore for those people "considering" a fixed rate, if you aren't considering applying now, then i wouldn't fret. You will have to deal with the rate landscape you face when you apply and if you find someone who tells you what the rates will be like in, say, 6 months time, ask them what the winning lottery numbers will be at the same date.

DavB93

Very good post Tangent Man...thanks for that. :beer:

F_T_Buyer

TangentMan wrote:

Just to avoid confusion.

What has been raised today is the Bank of England Repo rate (sometimes referred to as "Base Rate").

This is a variable rate set directly by the BofE and, mostly, used to control inflation / economic growth.

Any mortgage rate linked to this will change - typically "base rate trackers".
Any mortgage rate linked to a lender's "Standard Variable Rate" will also change. The amount is at the discretion of the lender. Some will pass on all the 0.25% increase, some may choose to increase their SVR by more, some possibly by less. Depends on how they want to position themselves in the market or make some money!

Fixed rates are not dervied from the BofE Repo rate. They are derived directly from the "Swap rates" in the money markets. These fluctuate on a continual basis and the lenders monitor them daily - hence why Fixed rates have changed (both up and down) independantly of the Repo rate.

Therefore for those people "considering" a fixed rate, if you aren't considering applying now, then i wouldn't fret. You will have to deal with the rate landscape you face when you apply and if you find someone who tells you what the rates will be like in, say, 6 months time, ask them what the winning lottery numbers will be at the same date.

Nicely put.

If anyone wants to look at projected rates, yield curves etc, check out this website:

http://members.cox.net/dmrc/Projected_Rates.htm

You probably want the link "United Kingdom - British Pound Projected Future Interest Rates".

Be sure to note when it was last updated. I have other links to real time quotations, but it's not as easy to read/understand.

The_Tax_Mans_Cash_Machine

TangentMan wrote:

Just to avoid confusion.

What has been raised today is the Bank of England Repo rate (sometimes referred to as "Base Rate").

This is a variable rate set directly by the BofE and, mostly, used to control inflation / economic growth.

Any mortgage rate linked to this will change - typically "base rate trackers".
Any mortgage rate linked to a lender's "Standard Variable Rate" will also change. The amount is at the discretion of the lender. Some will pass on all the 0.25% increase, some may choose to increase their SVR by more, some possibly by less. Depends on how they want to position themselves in the market or make some money!

Fixed rates are not dervied from the BofE Repo rate. They are derived directly from the "Swap rates" in the money markets. These fluctuate on a continual basis and the lenders monitor them daily - hence why Fixed rates have changed (both up and down) independantly of the Repo rate.

Therefore for those people "considering" a fixed rate, if you aren't considering applying now, then i wouldn't fret. You will have to deal with the rate landscape you face when you apply and if you find someone who tells you what the rates will be like in, say, 6 months time, ask them what the winning lottery numbers will be at the same date.

Considering that most of the banks have been wittering on recentlly about losing money through bad debt, I wouldn't be surprised to see them try & claw some money back by passing on at least the full amount, & maybe a bit more.

Of course the irony is that the problem of bad debt has come from their lax lending policies, & the more they cane the customers now, the more defaulters there will be.

I think thats caused a vicious circle. Serves them right.