Nationwide SMR

Mogz

Hi everyone

I just finished a fixed rate mortgage period on my nationwide mortgage (which was around 5.5%).

I was warned I would revert to SMR (3.99% at present), and went online to look at the available deals to switch to. I found a good tracker deal which I went through the online process to obtain, but once I got through the process, the only deals available were very much poorer than the SMR is at present (6% or thereabouts, fixed for between 3 and 5 years).

I immediately felt deceived and trapped, so hit the "close" button. Since then the mortgage has lapsed to the SMR.

So I'm currently paying more off the mortgage each month (my payment is about the same so the difference is knocking off my debt).

my LTV is around 13% equity on £240,00 property.

The Risk:
For how long will the SMR stay at 3.99%? It has no cap, and doesn't appear to be directly linked to the base rate. Basically they can up the cost of my mortgage at any time (even if the base rate doesn't go up, if the newspapers are to be believed).

The Problem:
I'm having trouble finding any fixed rates or trackers which will do better than 5 or 6%. MY own lender won't even offer me a tracker.

The question:
Considering the newspaper reports that banks are going to start hiking the SVR/SMR rates regardless of the base rate not changing, should I get a 5 year fixed rate to weather the storm in relative stability, or sit and wait for the rates to rise?

If it takes 2 years for the SMR to go above 6%, there is clearly no point moving for me.

Any advice fro many knowledgeable members would be greatly appreciated - as you will all understand - its a minefield out their for us Toxic Mortgage Warriors. Such a bad debt that we all are!! :A

The_J

As you say it is a risk, it is one I would be willing to take. The SMR was created post the base rate dropping to 0.5% whereas the recent SVR increases have mainly come from lenders who were linked to the base rate in some way or set up before the financial system really got into trouble. I think it unlikely that the SMR will increase in the near future but of course, nothing is guaranteed.

You are doing the right thing, while rates are low you need to chip away at the balance to improve your LTV ratio.