What Would You Do?

The_Jester

My five year fix rate with the Nationwide ended a few months ago so I've now dropped down to their 2.5% variable rate.

I planned to sit on this deal for the foreseeable future, particularly since Mr Carney from the Bank of England stated interest rates wouldn't rise until unemployment fell below 7%. As they predicted this wouldn't be until 2015/16 this was a good situation to be in.

However it seems I'm destined to have bad luck where mortgages are concerned as Carney has now said unemployment levels may fall sooner than expected.

I'm now in a quandary as to what to do. Do I wait and see what the interest rates will do meaning I may miss the good fix rate deals on just now or do I get a fix rate deal now.

What would you do if in my shoes?

ACG

They have said they would not look at it until unemployment fell below 7%... that does not mean they will increase rates as soon as it falls below that figure.

Personally i think i would stick where you are for the next 6 months at least and overpay as much as i can to get the balance down whilst the rates are low. Then if rates do rise your paying a higher rate on a lower balance - which should limit any potential damage? Thats a personal opinion though.

opinions4u

I'd stick with it and overpay.

Thrugelmir

Remember your mortgage rate is guaranteed to remain at 2% above base. So if you switch to another product you'll lose this. New products have follow on rates with far higher SVR's.

As OPU suggests, overpay and make the most of low interest rates while they last. Will be a once in a lifetime opportunity never to be repeated.

Imma_Number

I can tell you what I did. I kept paying Nationwide the same amount I was paying when I was on the fixed rate (mine was 5.08%). That way, if interest rates rates rose I would just reduce the amount I was overpaying to keep the payment the same. And then I overpaid extra on top of that

magpiecottage

Some things to remember.

Firstly, if you switch you will pay a fee to Nationwide. If you stay on the Base Rate plus 2% you won't.

Then, as has been mentioned, if you switch out of the current deal to something else you will be put on a higher rate at the end.

Also remember that nobody is offering you a fixed rate out of the kindness of their heart. They are doing it because they reckon they will get more than if they lend at a variable rate. Guess who they think will pay that extra money.

Then look at what the alternative is for a variable rate. It is considerably more than the rate you are paying.

No you cannot guarantee it will be cheaper to stay put but it is far more likely.