Bank of england base rate increase...

financialbliss

OK. We’re all in this particular corner of the forums to reduce / clear our mortgages.

Recent Band of England base rate decision this week was to keep the base rate on hold again – it’s been at 0.5% for 15 months now.

When the base rate does rise, how concerned are you about the ability to pay down your mortgage?

I've tried to cover mortgage options in poll options.

I've voted mortgage too small for rate change to have a significant effect. I'll come off my fixed rate in March 2011 and should have a sub-30k mortgage by then.

Interest rates would have to be double figures to make it painful (for me) to pay down the mortgage and with the economy in it's current fragile state, I can't see that happening.

Financial Bliss.

miss_undastood

The options don't really apply to me so I can't vote!!
I'm not concerned if rates rise, I am on a tracker but I have now linked my savings to BoE rates too so everything should rise at a constant rate. I must also point out the interest rate on savings is higher that mortgage even when you account for tax

Lexxi

I've voted slightly, my tracker ends in October, so either way the mortgage will be going up this year. I think I'm concerned as it's part of my nature, I panic that the interest will hit double figures, with no good reason for panicking! I'm overpaying as much as I can now and hope to be able to get a sub 5% mortgage come October

cha97michelle

I've been sticking my figures into this calculator

http://www.moneysavingexpert.com/mortgages/mortgage-calculator

My 1st thought was if rates go up i won't be able to afford to even make the basic payments. After putting figures in there i realised that this year my overpayments have been as though the rate was 5-15% anyway so i can still pay it but it is the overpayments that might come into doubt. So for the meantime i am going to overpay as much as i can now while times are good.

They are talking about 50 days till a budget, so i am looking at 2 months before rates might go up. Let's hope they bring in some stuff like the higher tax allowance straight away.

tattycath

We're on a standard variable product. I've just looked at the mortgage calculator and if it only goes up to 8% in next year or so we should be fine :-) hoping to get it down asap (once we've saved up for our wedding)

Jonbvn

miss_undastood wrote: »

The options don't really apply to me so I can't vote!!
I'm not concerned if rates rise, I am on a tracker but I have now linked my savings to BoE rates too so everything should rise at a constant rate. I must also point out the interest rate on savings is higher that mortgage even when you account for tax

We're in a similar position.:beer:
Our savings rates are higher than our mtg rate. This is likely to remain true, whatever BoE decide. Almost bomb-proof.

Thrugelmir

Unless your mortgage is a product directly linked to BOE base rate. Then there is no guarantee that mortgage interest rates will be linked to it.
Average SVR across all lenders is now over 4.5%. Some 4% above base. Whereas the historical norm was nearer 2%. Very low rate lifetime trackers will never be seen again.

Lenders are increasingly charging those on interest only mortgages an additional .25% . Doesn't sound much but adds up over the term of the mortgage.

To obtain a better interest rate improve your LTV. Overpaying the mortgage is the way to go. As ultimately borrowing less costs less interest.

Trying to guess rate movements as to whether to fix or not is nigh impossible. Any decision should be made on ones own circumsatnces as the market stands today.

mr_lordi

I voted slightly concerned.. i too am on a lifetime tracker that tracks at 0.27% above the base rate which is quite good really. I also left my payments at the 6% mark so in theory im overpaying, plus if and when they do rise i should not really take the hit as im still used to paying the high amount.........

inspector_monkfish

After yesterday's BOE Inflation Report, it doesn't look like the rate will be rising anytime soon.

Maybe try doing this poll again in about 12mths

greent

I voted 'other' We're on a fix (well, 2, as we have 2 parts to our mtge) one of which ends later this year. We do overpay, though, so could swallow some rise anyway (not that I really want to, of course!! )

Peelerfart

I think we're all pretty mortgage savvy on this board to be honest.
Wonder if perhaps the Mortgage board guys would have a different slant on the question.
and perhaps add another option like -

"very concerned, we are fully stretched at 0.50% and are so thick we didn't expect it to go up so can someone tell us how we can get compensation for our own stupidity".

Or am I just having a bad day !