Interest rates.

thegreenback

I'm just after an insight into public opinion. I've had a mortgage for about 3 years on what is currently a very nice variable rate. However, I'm not naive enough to believe this can go on forever so am considering fixing. The fixed rate offered works out to be approximately a 1.5% rise. Is it feasible that the Bank Of England base rate could rise this much in the next couple of years. I've got the 'experts' that I work with (us manual labourers are experts on any subject!!!) giving me two opinions. Some are saying that inflation is going to cause the rate to rise sharply but others reckon that the state of the economy is still so precarious that a fast rise would catostrophic for businesses and homeowners and therefore the risk of it is low. It seems to me that you're damned if you fix and damned if you don't!

GMS

Rates will rise at some point. If you find somebody with the actual date of it happening also ask them for 6 numbers for Saturday!

Too many differing opinions out there, including amongst the people who set the rates so the rest of us have no chance of a predicition.

Fixed rates are on the rise so if you are looking to get on one do it sooner rather than later.

Thrugelmir

Fixing at best is only a medium term solution. As the impact of higher rates will still be felt for a long time. You'll still owe 40% of your original mortgage advance after 20 years, if on a 25 year repayment mortgage.

So whilst interest rates are low well worth considering overpaying your mortgage to reduce the balance owed. As its this that will determine the amount of interest you'll pay.

thegreenback

Many thanks for that GMS. Do you think that 1.5% to fix is about right? Not sure if its a general thing or whether it depends on personal circumstances.

GMS

thegreenback wrote: »

Many thanks for that GMS. Do you think that 1.5% to fix is about right? Not sure if its a general thing or whether it depends on personal circumstances.

If you are happy to take the risk of rising rates then stay where you are.
If you want the security of fixed payments then only you can decide at what premium.

thegreenback

Thanks again GMS and thanks Thrugelmir. It is a short term solution I require. I have some unsecured debt that will be gone in the next 2 years and I am overpaying on these at the minute. We're comfortable at the moment and once this debt has gone then we'll be in a decent position to shorten the term of the mortgage or save to be able to put a decent sum down to reduce the payment.