Interest Rates

wymondham

Thrugelmir wrote: »

BOE controls base rates not the Government.

The markets will determine the cost of servicing UK public sector debt levels.

Officially yes .... but I can't help feeling that midnight phone calls often come into play from no. 10 !!

mbga9pgf

abaxas wrote: »

Incorrect, they change rate relative to CPI and 'financial stablilty'.

Ie they do not control, they follow what is happening.

Depending on a 2 year forward projection.

Inflation today has little effect on Base rate. All it can do is change the model they use.

If anyone thinks that we will have long term inflation once we get the cutbacks needs their head feeling. It is, and always was, deflation.

Market rates however are a different matter. It will be rising market rates that assist the crash. Lending is about to get a whole load more expensive.

treliac

lostinrates wrote: »

We're almost certainly going to fix.....I think! Problem is the 2yr fix is really tempting compared to a five year.

Factor in the cost of the buying the product and divide it by the number of years fixed for. Then see which is most attractive and by how much?

We fixed for 5 years - wanted that timespan of certainty and at the right rate. It was apparent that fixed rates were starting to move upwards. I know one or two people who were told, by brokers, to take a tracker and if/when rates go up fix at that point.

However, even if you get a short-term deal to start with, it takes discipline and good housekeeping for most to make it pay by overpaying. So many people spend up to (or over) the limit of their disposable income - there will be shock waves when rates do start to rise. And by then, it won't be easy to get a good deal.

It's a gamble. How do the overall costs stack up for you? Which aspects of your personal circumstances should be taken into account?

lostinrates

treliac wrote: »

Factor in the cost of the buying the product and divide it by the number of years fixed for. Then see which is most attractive and by how much?

We fixed for 5 years - wanted that timespan of certainty and at the right rate. It was apparent that fixed rates were starting to move upwards. I know one or two people who were told, by brokers, to take a tracker and if/when rates go up fix at that point.

However, even if you get a short-term deal to start with, it takes discipline and good housekeeping for most to make it pay by overpaying. So many people spend up to (or over) the limit of their disposable income - there will be shock waves when rates do start to rise. And by then, it won't be easy to get a good deal.

It's a gamble. How do the overall costs stack up for you? Which aspects of your personal circumstances should be taken into account?

Thanks treliac.

I agree: in fact, the temptation is to go onto a shorter term tracker and swap later, but the the two year fix is 4.09% I think...it works out well. There is sadly going to be some fairly high cost necessary expenditure in the short term and knowing what out goings will be in that period is a good comfort. The end of two years should see income, no unforeseen circs, rise by approx 14-15% before tax....we're wondering if that might prove the safety net that makes being a little short sighted ''appropriate''...allowing us to make some of the (non-optional) spends.

bigheadxx

I would think that a 2 year fix would put you in the unenviable position of having to remortgage when rates will definitely be rising and probably to levels we have not seen for 20 years.

I also think that overpaying your mortgage may be somewhat misguided given that future higher inflation will reduce the amount of debt in relation to income far more than any overpayments.

We are hoping to "trade up" sometime in the next 12 months, borrow the comfortable max and hopefully get a decent 10 year fix before rates start to rise.

lostinrates

bigheadxx wrote: »

I would think that a 2 year fix would put you in the unenviable position of having to remortgage when rates will definitely be rising and probably to levels we have not seen for 20 years.

I also think that overpaying your mortgage may be somewhat misguided given that future higher inflation will reduce the amount of debt in relation to income far more than any overpayments.

We are hoping to "trade up" sometime in the next 12 months, borrow the comfortable max and hopefully get a decent 10 year fix before rates start to rise.

I think you timing is probably right...hence our..debate with selves.

Over paying will NOT be possible withing this time frame either.

bigheadxx

lostinrates wrote: »

I think you timing is probably right...hence our..debate with selves.

Over paying will NOT be possible withing this time frame either.

I really do hope the timing is right!!!

Really2

lostinrates wrote: »

Thanks treliac.

I agree: in fact, the temptation is to go onto a shorter term tracker and swap later, but the the two year fix is 4.09% I think...it works out well.

Do they do capped tracker mortgages now? You could get the best of both worlds.

lostinrates

Really2 wrote: »

Do they do capped tracker mortgages now? You could get the best of both worlds.

Not sure TBH. we are sticking with one of our banks because they are being extremely accommodating about some structural issues....yeah, I know...this is not an MSE friendly property in many ways....

sss555s

I agree with the above where a 2 year fixed has a high potential of finishing just as we are getting to the worst of it.

I'm half way through a 5 year fixed and it was the best thing i ever did.

It's a big relief when you don't have to worry financially where the rates are going.