MSE News: 10 year 2.39% fix – should you grab it?

The newspapers are full of stories about the Coventry Building Society's 10 year fixed rate mortgage deal, at 2.39%...
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'10 year 2.39% fix – should you grab it?'
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  • Pincher
    Pincher Posts: 6,552
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    I was on BOE+1.75%, so was on 2.25% for about seven years, from 2009. Now they are talking about dropping BOE rate further, so maybe 1.85% , if I hadn't sold.

    I wonder what the Japanese pay, for mortgage.
  • gadgetmind
    gadgetmind Posts: 11,130
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    Give recent events, we're likely to see a lot of volatility in both interest rates and inflation, and we could see them moving in opposite directions.

    If a mortgage was a significant chunk of my outgoings, I'd be looking to fix right now.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • amnblog
    amnblog Posts: 12,388
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    Pincher wrote: »
    I was on BOE+1.75%, so was on 2.25% for about seven years, from 2009. Now they are talking about dropping BOE rate further, so maybe 1.85% , if I hadn't sold.

    I wonder what the Japanese pay, for mortgage.

    Don't the Japanese, and their parents, and their grandparents pay for a mortgage.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Pincher
    Pincher Posts: 6,552
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    Assuming I have a house that is worth £1miilion, no mortgage.

    If they lend me £500k at 2.39%, ay 50% LTV, I then buy shares that pay 5% dividend, i.e. £25,000, on which I pay 7.5% dividend tax, so I have £23,125 . 2.39% interest on £500k is £11,950. Assuming interest only, that means I get £11,175 a year. Ten years later, sell the shares, pay it back. Ultimate stoozing.

    Drat, it's a day dream. They will never lend it to me. :(
  • gadgetmind
    gadgetmind Posts: 11,130
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    Pincher wrote: »
    I wonder what the Japanese pay, for mortgage.

    You can get a 35 year fixed deal on sub 1.5% and 10 year on 1.15%.

    Prices in Tokyo aren't far different to London with an average condo costing about £400k but this rises quickly in prime areas,
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Pincher
    Pincher Posts: 6,552
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    gadgetmind wrote: »
    You can get a 35 year fixed deal on sub 1.5% and 10 year on 1.15%.

    Prices in Tokyo aren't far different to London with an average condo costing about £400k but this rises quickly in prime areas,


    So, borrow 100million YEN for 1.15% for ten years, convert it into sterling at 1:130, giving £769,231. Buy some shares yielding 5%, which pays out £38,461 dividend a year, paying 7.5% tax, leaving £35,577.

    1.15% interest on 100miilion YEN is 1.15million YEN, which is £8,846.

    That is £26,731 spending money a year.

    Hopefully, the exchange rate goes back to 1:180 after ten years, so 100million YEN is only £555,555, so there is £213,676 leftover.

    I just need sterling to bottom, and somebody that will do a foreign currency mortgage.
  • gadgetmind
    gadgetmind Posts: 11,130
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    It's called a yen carry trade, and it works brilliantly until something like this happens.

    pound-loser-argentine-peso-cropped.jpg
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • This mortgage product appears to be portable.


    So Martin's main concern - that you would need to pay a penalty if you moved house in the next tem years - doesn't seem to apply.
    Everyone needs something to believe in.

    I believe I need another beer.
  • My husband and I have just signed up to a 10yr fixed.
    No fees and we can port it if we move house.
    We went for a fixed as we like to know what our outgoings are.
  • SavingSteve
    SavingSteve Posts: 483 Forumite
    This mortgage product appears to be portable.


    So Martin's main concern - that you would need to pay a penalty if you moved house in the next tem years - doesn't seem to apply.
    Exactly, I cant believe he's not corrected this, and now this blatent falsehood is being linked to in the weekly email. Anyone would've thought this site was owned by a company that benefits from people regularly switching mortgages...
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