2 year fixes to hit 6% within weeks!

meanmachine_2

"Two-year fixed-rate loans have proved hugely popular in recent years. The best-buy two-year deal rose from 4.5% in 2005 to five per cent at the beginning of this year and is now 5.5%. In two months, analysts warn, these deals could cost six per cent or more."

http://www.thisismoney.co.uk/mortgages/article.html?in_article_id=421648&in_page_id=8

And this was written before swap rates jumped again.

A 2 yr fix is now costing 6.31%

I only remember when fixes cost the same, or were even cheaper than a variable.

Apparently that hasn't always been the case, and fixes tended to cost more 8-10 years ago. We could be reverting back to those times.

To think, in Aug 2005, you could have got a fix for 4.15% (with smallish fees attached). That's a jump of 1.75%.

skintlass

I'm thinking of fixing my mortgage now for 7 or 10 years ( as I can only see interest rates rising over the next 2 years) then when I move taking out the extra as a second mortgage on whatever terms I can get then - do you think this is a good idea. I'm off to see a mortgage advisor tomorrow.

skintlass

Whoops 2 years should have read few years in my previous post.

Gorgeous_George

If I was to choose a fixed-rate deal, I would only fix for 10 years. There's a risk that IRs could fall and you end up paying more than necessary but, IMHO, that's better than the risk of not being able to afford a new deal when the short term fix ends.

With my tracker, I take the rough with the smooth. At least rises are small (if often).



GG

meanmachine_2

skintlass wrote: »

I'm thinking of fixing my mortgage now for 7 or 10 years ( as I can only see interest rates rising over the next 2 years) then when I move taking out the extra as a second mortgage on whatever terms I can get then - do you think this is a good idea. I'm off to see a mortgage advisor tomorrow.

The rise in fixed rate costs is more to do with worldwide bond markets. The bond market is tied to interest rate expectations, but there are other issues to consider also.

As I say, traditionally, fixed mortgages were MORE expensive than variables but you had the security of knowing what you were paying each month.

That's why variables always used to be more popular. They were cheaper.

Now it looks like we're heading back to a market where fixes carry a premium.

That doesn't necessarily mean UK IRs are going to go above 6%, however.

The issue is more complex than that. And you *might* be better off with the tracker, hoping that the bond market fears about worldwide inflation are overstated.

Prudent

What are swap rates?

dwsjarcmcd

Swop rates are the price that the money market sells money to institutions, who then lend them out to the public. They are basically a prediction of what the market feels will happen over 2, 3, 5 years or whatever.

David

ManAtHome

Unfortunately, it's difficult to make any sensible decision based on economic indicators as the Bank of Excess and NuEdwardians are doing everything they can to keep the proles in their place (in hock to their "Lords and Masters").

Anyone's guess as to whether we end up like Japan - IRs at 0.5% (hooray), currency down the tubes (booo...).

cheggers

With a new PM in charge I can see rates going through the roof.

mjr600

So is a 5 year fixed at 5.78 with a £400 arrangement fee reasonable in the market at present ?

quantumleap

I've just been to the nationwide (my current and so far only providor). I've been on 2 year fixed for the last 6 years. The best they have is 6.18% with no fee.

Any views on this?