Are trackers wise with current NR problems?

barnishroader

I am currently on a fixed rate with Nationwide which ends 30th Nov.
I have spoken to a no fee, whole of market advisor and he is coming back to my house tonight to process my new deal.

I was going to go with a +0.17% tracker deal from the Woolwich as there no fees at all and there is no tie in so i could chenge after 2 month if i so wish.

With the current Northern Rock problems is it likely that the base rate is going to rise a lot and therefore make my tracker option possibly much more expensive then it had looked a few weeks ago.

My advisor said that while it could be likely that the rate would maybe have 2 increases by the first few months of next year, that would still only bring it to just above what fixed rates were offering and then if it dropped down once, i would be back below them again.

My wife and i have a baby on the way so when she is on maternity leave her wages could be affected therefore meaning money will be tight enough without having to cope with hikes in the base rate.

I hope that this is clear but in effect i am asking does anyone foresee the rate being affected much in the next 6 months due the the current panic going on.

homer_j_3

if you go for a tracker you have to take the risk that there will be 12 rate rises in the next 12 months. It is unlikely but possible as it is reviewed monthly. This applies for all lenders not just NR.

When does your wife intend to return to work - and be realistic. I would probably want to have some control over my payments in this situation, especially if I knew my income was dropping and rates could increase. That is my outlook though and sounds like what you are wanting me to confirm but you have to make the choice at the end of the day.

If you have equity in your property, why not ask your adviser to look at a capped rate? They will have a variable rate element to them but with the cap putting a limit on what your payments can go upto then you will know what you have to budget for.

payless

No fees with Woolwich..??.. what about the £275 exit fee!

barnishroader

homer_j wrote: »

if you go for a tracker you have to take the risk that there will be 12 rate rises in the next 12 months. It is unlikely but possible as it is reviewed monthly. This applies for all lenders not just NR.

When does your wife intend to return to work - and be realistic. I would probably want to have some control over my payments in this situation, especially if I knew my income was dropping and rates could increase. That is my outlook though and sounds like what you are wanting me to confirm but you have to make the choice at the end of the day.

If you have equity in your property, why not ask your adviser to look at a capped rate? They will have a variable rate element to them but with the cap putting a limit on what your payments can go upto then you will know what you have to budget for.

What i am asking is, is the current situation with NR likely to affect the BoE rate over the next few months or will it have no effect at all.
I heard before i left for work this morning that other banks are now feeling affects and that the housing market could slump which is making me think that there could be a number of increases soon.

Although Gordon Brown does not decide rate rises, would he not have some influence especially as rises would cause a lot of people to lose their homes and this is not something he would need with an impending election coming.
That would make me think that if they do go up 2 or 3 times, then his influence would try to bring them back down again.
My advisor had suggested this would be likely.


I haven't looked at capped mortgages at all.
If they mean that you are kept below a certain rate then what are the downsides to them?

barnishroader

payless wrote: »

No fees with Woolwich..??.. what about the £275 exit fee!

well there is that, but no legal, no surveying or no arrangement fee.
some of the ones looked at had much higher costs than £275.

have you any other suggestions?
i couldnt find any that had no fees and a competitive rate.

ilovemycar

i am about to enter into a tracker mortgage and im wondering if ive made the right decision as i have always had fixed rate is it too late to change my mind and go for fixed on this one.

payless

barryheffron wrote: »

I haven't looked at capped mortgages at all.
If they mean that you are kept below a certain rate then what are the downsides to them?

limited products on market, so lender choice/ criteria might be harder to fit

Sold usually at a starting premium to trackers , and a max rate at a premium to fixed
ie say - for eaxample, not actual products-
tracker might be at 5.75%
Capped might be at 5.95% with a cap at 6.2%
Fixed at 6%

obviously from time to time a product comes out thats seems to be really competitive, but usually there's no such thing as a free lunch.

That said they do offer some benefits of both and some people / advisers like them ,

payless

barryheffron wrote: »

well there is that, but no legal, no surveying or no arrangement fee.
some of the ones looked at had much higher costs than £275.

have you any other suggestions?
i couldnt find any that had no fees and a competitive rate.

Not a place for suggestions, sorry, even if I knew enough about your needs to make one

Only highlightoing the £275, as its too easy for exit fees ( not early repayment charge aka redemption penalies) to be over looked.

Joto_2

payless wrote: »

No fees with Woolwich..??.. what about the £275 exit fee!

We had the option of going with the Woolwich but decided to go with C&G.

Same perks except there is a £99 registration fee but no exit fee. I think the rate is only available through brokers (we went through London and County)

Gorgeous_George

homer_j wrote: »

if you go for a tracker you have to take the risk that there will be 12 rate rises in the next 12 months.

:rotfl:

If that was to happen then mortgage repayments would be the least of our problems.

I'd make sure I was tied to Bank Of England Base Rate and watch my mortgage fall over the next 12 months. Be careful about any particular bank's base rate - these may not follow the Bank of England.

If in doubt, fix. Obviously the safest bet but fix for 10 years otherwise you'll
be lining the mortgage advisers pockets again in 2 or 3 years' time.



GG

barnishroader

payless wrote: »

Not a place for suggestions, sorry, even if I knew enough about your needs to make one

Only highlightoing the £275, as its too easy for exit fees ( not early repayment charge aka redemption penalies) to be over looked.

no problem.
i've just been using a website mform and found a fixed 5.79% so might go for that.
fees are £599.

its just the advisor is coming tonight so need to be prepared!!

as my current deal doesnt expire until 30/11/07, i assume that i would be able to back out of anything i agree with him tonight anytime up until then?