So, where are interest rates going?

tbourner

Plans_all_plans wrote: »

This is an interesting thread. We are soon to be taking out a mortgage on a 5 yr fix with Halifax at 5.19%. I am a stay at home mum and my fiance (soon to be husband) works full time earning 15.5k. We have a 40k deposit to put down. Originally we thought that a fixed rate for 5 yrs would be best as I will be out of workplace for next 5 years, but would people on here think we should be going for a tracker? If interest rates go higher than 6% we couldnt afford the repayments though.

Are we best sticking with the 5 yr fix in our circumstances?

It's a gamble really. You could go for a tracker and save away as much as psosible whilst on the low interest rates, and hope that when they do go up (which they will) it's not too quickly and you have saved enough to cover the difference and hopefully have left over after 5 years.
Otherwise do what I did and go for the safe option of knowing exactly what your payments are, knowing you're covered for 5 years and hope at the end you're in a position of higher houseold earnings and similar interest rates to what you're paying.

property.advert wrote: »

Not at a busting 5.15% you are not.

At 5.15%-3.99%=1.16%, each £100k borrowed is costing you £96.67 a month too much.

But if interest rates jump 0.25% every 6 months (is that a reasonable estimate?) then by half the term of the fixed rate it's break even and will then be costing more for the other half of the term?