Debate House Prices


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The 25 year fixed rate mortgage returns to the UK market....

HAMISH_MCTAVISH
HAMISH_MCTAVISH Posts: 28,592 Forumite
Part of the Furniture 10,000 Posts Name Dropper Photogenic
in Debate House Prices & the Economy
The new 25-year fix from Manchester BS is available for those who have a deposit of at least 20  per cent or the same amount of equity in their home. Borrowers can choose to fix for anywhere between ten and 25 years.

However, at an interest rate of 5.24 per cent, with a £999 fee, borrowers are paying a premium for fixing their payments for so long.
http://www.thisismoney.co.uk/money/mortgageshome/article-2191621/Are-brave-The-25-year-fixed-mortgage-returns.html#ixzz24fsga7AC
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments

  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Paying a premium? Sounds like a steal to me.

    Can be taken as an interest only loan too, at 5.99%.

    Wonder if this is like the HSBC great deal which had a tiny amount of funds?
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Graham_Devon wrote: »
    Paying a premium? Sounds like a steal to me.

    Fill yer boots then Dev...

    30 year fixes in the US are 3.5%, and given the likely trajectory of rates here over the next decade or more, no reason why they should be any higher here.
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”
    -- President John F. Kennedy”
  • michaels
    michaels Posts: 29,033 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    What is the markup over 25 year gilts? Much larger than for shorter fixesI would guess.
    I think....
  • chewmylegoff
    chewmylegoff Posts: 11,466 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    michaels wrote: »
    What is the markup over 25 year gilts? Much larger than for shorter fixesI would guess.

    20 year UK gilts yielding about 2.5%
    30 year about 3.0%
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    michaels wrote: »
    What is the markup over 25 year gilts? Much larger than for shorter fixesI would guess.

    How does this connect to a 25 year mortgage product?
  • IronWolf
    IronWolf Posts: 6,430 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Thrugelmir wrote: »
    How does this connect to a 25 year mortgage product?

    The interest rate should always be higher than the 'risk free' rate.
    Faith, hope, charity, these three; but the greatest of these is charity.
  • Loughton_Monkey
    Loughton_Monkey Posts: 8,913 Forumite
    Part of the Furniture Combo Breaker Hung up my suit!
    If I were in the house I was happy with for the next 25 years, and aged under 40, then I'd look at this very closely.

    At the other extreme, though, FTB's would tend to be screwed by this since with a decent deposit, they can probably get lower rates over the [very likely] 5 years max that the mortgage will actually last.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Loughton_Monkey wrote: »
    If I were in the house I was happy with for the next 25 years, and aged under 40, then I'd look at this very closely.

    These days how often does that happen? Aspiration to own a bigger investment is a far bigger driver than being content with the initial purchase.
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Thrugelmir wrote: »
    These days how often does that happen?

    The mortgage is penalty free for early repayment after 7 years.

    So people worried about rate rises and unsure of their long term plans can have their cake and eat it too.
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”
    -- President John F. Kennedy”
  • DpchMd
    DpchMd Posts: 540 Forumite
    Seems incredible to think that I could be paying nominally the exact same monthly repayment in 20 years as I am today.

    I suggest all those board members who are (pretending to be) sitting on huge deposits while renting think long and hard about the long term benefits of taking this deal versus continuing to rent.
    "Beware of little expenses. A small leak will sink a great ship." - Benjamin Franklin
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