Will we be stretched?

Baxter100

Mattygroves2 wrote: »

I too have got a lifetime tracker of 0.99% over base with Woolwich and it's an offset too. It was taken out in either 2007 or 2008 though at 60% LTV. We've never been able to find anything to match that since.

The current HSBC tracker rates are good but historically they are high. The rate before our current one was something like base -0.13% and before that we were on standard variable rate -0.99% when SVR was much closer to base than it is now and base rate trackers didn't really exist.

It depends on your attitude to risk and ability to pay a much higher repayment - I remember the 15% I paid in the early 90s so know what it feels like to have a hike in rates. In our case we've always been on a low income multiplier so haven't needed the security of a fix and have gambled with trackers / discount mortgages and it has always worked out cheaper.

Wow those are good. :eek:

Part of the attraction about a lifetime tracker for us (would be interesting to see if anybody else agrees), is that we can't see any feasible way in which the interest rates can be raised by a significant % anytime soon, without plunging millions of UK households into the position of not being able to afford their mortgage repayments.

Also every extra £200 that is being spent on mortgage repayments is threfore not be being spent at Tesco/Amazon/IKEA/sainsburys etc. This would have a huge knock on impact on growth, jobs, wages etc, as well as government tax receipts. Raising interest rates would also reduce house prices, which would again impact on the government coffers.

Can interest rates really rise that much?

caprikid1

Sorry mine is a 2007 deal I recal, I was just trying to highlight how high the base rate trackers are compared to historical levels of Base + .5 or 1%.

Conisdering 4-5% has been a trypical base rate for many years then that could see a 6-7% rate.

If we consider that rate could increase this year by .5% which is not massive and unlikely to kill the economy then a lot of the fixed rates start to look a lot more attractive.

To me the simplisitc assumption I make is when I view rates cannot go any lower you fix when rates cannot go higher you go variable. Obviously subject to working through Fees and when etc etc.

Baxter100

Pardon my ignorance.... but wouldn't a base rate of 5% mean a typical SVR of something like 9%?

caprikid1

No thats exactly the point , hence I had a bank base tracker etc or .5%. Traditionally SVR's have been close to BBR. When rates droppped the gap became large hence some of the larger Bank Base +. If you google around you can get some historics of Bank Base Rates and SVR tables. Historically they have tracked each other closely. Nationwide had a policy that their SVR would NEVER be more than 2.5% above base, that was the absolute mad maximum. Most SVR's are probably c4%. If I was going for a variable I would probably want a discount on the SVR as SVR's are unlikely to rise at the same pace as Bank Base rate as the gap will close.

caprikid1

http://www.economicshelp.org/blog/5709/housing/housing-market-stats-and-graphs/

Some interesting graphs.

AlexMac

Back to the OP; no bad thing to stretch yourself a bit in the early days...

and while thanking you Capri kiddo for the really useful graph site, I can beat you regarding...

caprikid1 wrote: »

Sorry an error my tracker is .9% above base so 1.49%

We have 1.25% as we went for a tracker at 0.75% above base about 12-15 years ago; but at that time, base rate was hovering around 5% plus; so we gambled on it falling; never dreaming to would fall by a factor of ten to 0.5%!
http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

I bet the Nationwide (who gave it to us) are kicking themselves.

But over a lifetime, things even out; my 1st ever home loan in the 1970s was at ten%; but that was for a 100% mortgage under a scheme by the old Reds in the Greater London Council; long-abolished by Thatcher who seemed a tad upset at having a bunch of flag-waving bolshevics across the river from Westminster. Another more conventionally capitalist one I had peaked at around 15% in the 1980s.

Think what that would do to your tracker! (Don't panic; it won't happen)

And I hope you get your amazing house

dimbo61

I would put down 20% deposit if possible and buy the stuff you need as you go along.
Each month buy one big item if the house needs little work
If you take a fix look at 5 years to give you security