to fix or not

juliesg

What is everyone else doing. Cant decide if to stay on variable or fix.

dumpallhere

See also How long will interest rates remain low ?

John1993_2

Fixing will, in general, work out slightly more expensive on average than the best floating deal that you can get. The advantage is that you get certainty over your payments. Thiis meanns that the qustion of "should" comes down to how much value you put on knowing exactly what you'll pay.

I work in finance, trading interest rates, and so am supposed to know better than most where things are going. I am well able to manage rates going through the roof, and understand what I'm giving up in terms of flexibility to overpay by fixinng my rate, but that's exactly what I've just done.

So, in essence, if someone like me is happy to fix for five years, then I'd assume that most others would make the same choice. You can borrow for five years fixed at 2.5%. To me that seems ludicrously cheap, and I never for a moment considered gambling on saving a bit by going with a floating rate.

dumpallhere

Pound falls as Bank of England plays down rate rise

The pound has fallen sharply after the Bank of England warned that markets were wrong to assume that it would start raising interest rates soon.

............

The Bank has held short-term interest rates at their current historic low level since March 2009.

However, last month markets brought forward their expectations for when interest rates in the UK - as well as in the US and other major economies - would start rising again.

It came after a statement from the US Federal Reserve laying out a timetable for withdrawing its own QE programme was taken as a signal by markets that the era of cheap money was coming to an end, and sent stock markets, commodity and bond prices lower worldwide.

The Bank's statement immediately scaled back those expectations in the sterling money markets.

Even so, the Bank is still expected by markets to raise interest rates by a quarter-point within the next 12 months. Back in April, markets did not expect any change in monetary policy over the coming year or more.

dumpallhere

So the increase may come later than expected (2015-2016 is what the is being suggested today, but who knows!).

The question is what if it changes (up) before 2015? You'll lose out then and you'll not get the deals / rates you are getting today in 2015 or after.

IMHO ....

John1993_2

dumpallhere wrote: »

Pound falls as Bank of England plays down rate rise

The value of the pound is not really of primary concern to people wonderinng whether to fix their mortgage or not. The more important question is what's happend to GBP swap rates, and we find ourselves tonight with them at 1.49%, as compared to 1.57% yesterday. Lower, but not by very much.

They are still higher than they were just over two weeks ago, and significantly above were they've been over the last year.

dumpallhere

That was just the title of the article that I linked and quoted the information (about BOE rate change expectation(s), relevant to topic) from.

Nothing more!