Mortgage Rates scaremongering?

johnnyfeb

Hi

Just looking for advice on whether i should move from a Variable rate (BR+2%=2.5%) to a fixed anytime soon - what with all the talk on the news recently about base rate potentially going up by 2% by end of the year.

Thing is, my current lender (Nationwide) from what i see on their site dont have great fixed deals - about 4.5% with a £1k arrangement fee or 5.3% without the fee for 2 years - cant stand bl**dy arrangement fees!

Anyway, i'm thinking if i dont make a move soon that there wont be any good fixed deals left when i do decide to remortgage - catch22 comes to mind.

I still have a big old mortgage to pay so trying to decide what to do right now - all advice appreciated.

Thrugelmir

Mortgage interest rates will rise for wider reasons than just base rate changes alone in the future.

Simple answer is to overpay your existing mortgage.There's no limit to how much you can.

So at least the impact of any future rises will be minimised, and in the process you'll hopefully clear your mortgage in a shorter time frame.

johnnyfeb

well, my variable rate will always be 2% above base - they cant change what i pay above base, so what i personally pay with my current mortgage is purely dependent on any base rate changes - and i understand that i could make overpayments - but if you're not in a position to make overpayments, which i'm not right now, then i'm thinking a fixed would be a better way to go? but not sure - i can handle the base rate going to 3%-4% giving me 5%-6%, but if it goes above that then its going to hurt. And in all likelihood, the base rate will go above that sometime next year - decisions, decisions ...

Niksan

Well, depending on what mortgage you would end up going for, 4.5% for example would mean you could overpay 2% of what the interest would be now on your variable, as if you can't overpay now you're unlikely to be able to afford the fix. But as you state, you can handle the rates going toward 5-6% so that gives you the opportunity to overpay 2.5-3% of interest now, which means your interest would reduce which mean you'd be paying even more off the next month, etc.

[STRIKE]Is the mortgage with c&g by any chance, as the 2% over base there was a cap, as in it's upto 2% over base, so could lower.[/STRIKE]

Ignore that, bit, I have manflu today and words don't seem to be filtering too well.

Thrugelmir

johnnyfeb wrote: »

well, my variable rate will always be 2% above base - they cant change what i pay above base,

If you switch to a fix rate product it possibly will. As the Nationwide's SMR is 3.99%. This is the rate you will default to when the fixed term ends. Unlike the BMR which you are on. There is no guarantee that the the rate will track base at +2%.

If you cannot afford to make any overpayments at all. How can you afford a fix rate mortgage? By overpayments I mean regular payments not large lump sums.