HSBC 2.79% 10 year fix

pathtofreedom

Something I thought about when buying my new place and chosing fixes was where will I be in 2 or 5 years. I got stuck before with negative equity and couldn't remortgage, even without that though I would have struggled with the rules getting stricter and the fact I was contracting then.

So are you in a secure job (is any job secure? ) or have any health problems that make it worth doing a 10 year for that peace of mind if you can't remortage in 5? It might actually cost you more, as no one can know what will happen, but peace of mind is normally worth paying a little extra for.

frazell

darich wrote: »

I understand the logic...but can it really go any lower?
Current payment of 600 is not difficult...but with brexit and indyref2 I see a lot of uncertainty on the horizon and getting a fixed deal does have some appeal.

The simple answer to that question is, yes they could go lower and I guess the BoE will tell us tomorrow what the plan is. Its got a whole 0.5% left to fall to bring us to a big fat 0% if that's what they think is needed. It could even go negative if it needs to.

Uncertainty to me means a lowering of interest rate to shore up the economy. Any blips in the financial stability of the UK will mean they'll print some more money and erode the deficit away.

I'd bet a shiny £20 note that interest rates wont go up tomorrow (at worst they'll just stay at 0.5%)

d70cw6

cant see interest rates increasing in the short to medium term. maybe track for 5 years and then fix.

frazell

Also, if £600 is easily affordable and assuming you've got savings and/or an emergency fund then you really should consider overpaying your mortgage by as much as possible.

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

Input your figures in the calculator and see the effect of overpaying.... even £25pcm makes a big difference to reducing the term and the overall interest you'll pay.

poppy10_2

cahillg81 wrote: »

if interest rates remain stable over 10 years using the overpayment facility he'd have saved 56k

Interest rates are at a 500-year low. The current rates are abnormal. Over a ten year period the most likely direction for rates is up

frazell

poppy10 wrote: »

Interest rates are at a 500-year low. The current rates are abnormal. Over a ten year period the most likely direction for rates is up

I fully agree that the interest rate is at an abnormal low, but who's to say that the rate will go up in 10 years? Its been at 0.5% now since 2009 so that's 7 years at an unprecedented low.

If the rate gets cut tomorrow to 0.25% who's to say that it wont stay like that until Brexit (proper) in 2 years time at which point its cut again to hold things together? After which its held for who knows how long whilst we deal with a recession over a period of years.

It really is crystal ball stuff and that's my point about maintaining flexibility.

Besides, if the OP were to really focus on overpaying the £89,000 remaining, the reality is they could be mortgage free very much sooner than the timespan we are talking about.

Thrugelmir

frazell wrote: »

I fully agree that the interest rate is at an abnormal low, but who's to say that the rate will go up in 10 years? Its been at 0.5% now since 2009 so that's 7 years at an unprecedented low.

BOE base is correlated to liquidity levels in the banking system as opposed to the propensity of lenders to lend more. When people are least expecting it to , one day the tide will turn.

frazell

Thrugelmir wrote: »

.....one day the tide will turn.

Indeed it will and boy will it catch a lot of people out.

Keeping a lid on inflation will be the driver for increasing rates but for the short/med term my opinion is an increase would damage an already fragile economy.

AnotherJoe

frazell wrote: »

Indeed it will and boy will it catch a lot of people out.

It will, but only people who arent taking notice of whats happening. Its not as if you'll wake up one day and find MC has just put 2% on BR out of the blue. This will be telegraphed many months, likely years, in advance, and certainly not this side of Brexit plus a bit as Brexit isnt an immediate thing anyway it will take years to extricate us from agreements and get new ones set.

So we've likely got at least 3-5 years before all that settles down, in the meantime a low Pound works well for us, encourages inward investment, makes imports such as french and german cars more expensive so even less room for the EU to look at anything suicidal like tariffs because that would hurt them much more than us.

So, low interest rates for the next 3-5 years and then they would have to much more than double to make up for missing out on those, over a 10 year fix. Which is why the advice from another poster about track for 5 then look again is bang-on in my book.

darich

Sounds overall then that I'm pretty much on the best deal.
I can overpay to my hearts content and I'm only paying 2% above boe rate
Given my comfort with £600 I think I'll sit on my current mortgage and think about an extra 25-50 per month overpayment.