Interest rates - good or bad time to fix?

truescot

OK guys crystal ball time. I have a mortgage in two halves - one half is BoE +0.75% (so currently 1.5%) the other half is a fully flexible lifetime tracker interest-only (BoE + 1.99%, so currently 2.74%). Always been happy with the term, rate and especially the flexibility, as I overpay most months on Part 2, including some occasional lump sums.


Is the general consensus that rates are more likely to go up or down with the whole Brexit "situation", as I am wondering whether I should be reconsidering the mortgage that I have had for years? Is it a good time to seek some security by going for a 5 year fix or should I leave well alone?


The equity in my home etc means I would likely have the whole of the market open to me.

Thrugelmir

You could fix for 5 years. After that how many years remain on the mortgage term. If you were to choose a lifetime base rate tracker mortgage now. What rates would be available?

A smooth Brext could see base rate rise quickly to 1.5% according to Mr Carney. This would fundamentally change the whole lending market.

Have you considered a 10 year fix?

Another consideration is the cost of remortgaging depending on how much you owe. As the mortgage balance reduces flitting between lenders will become less and less economic.

Though it's likely that the lending market will converge as normality finally returns.

getmore4less

Depending on LTV the higher rate tracker probably should have been fixed already that is now expensive and has been for some time.

The Base + 0.75% is lower than savings rates.

truescot

getmore4less wrote: »

Depending on LTV the higher rate tracker probably should have been fixed already that is now expensive and has been for some time.

The Base + 0.75% is lower than savings rates.

The fact that it's in two parts means I can't change just one half of it, so with half at 1.5% and the other at 2.74%, the effective rate is 2.12%, which is pretty competitive for a lifetime tracker, and the added flexibility swung me to not change. If I can overpay the higher rate part and pay it off, I am left with a lifetime tracker at Base +0.75%

Thrugelmir

truescot wrote: »

The fact that it's in two parts means I can't change just one half of it

You've two separate loan accounts (products) under the one mortgage. Your lender should allow to fix the 1.99% tracker account.

peter12345678910

Thrugelmir wrote: »

You could fix for 5 years. After that how many years remain on the mortgage term. If you were to choose a lifetime base rate tracker mortgage now. What rates would be available?

A smooth Brext could see base rate rise quickly to 1.5% according to Mr Carney. This would fundamentally change the whole lending market.

Have you considered a 10 year fix?

Another consideration is the cost of remortgaging depending on how much you owe. As the mortgage balance reduces flitting between lenders will become less and less economic.

Though it's likely that the lending market will converge as normality finally returns.

I also heard the same thing, it also depends on inflation reaching the 2% target at the end of the year.

Spangled

How much is your outstanding mortgage balance? You say you've had the mortgage "for years" which suggests you may have a smaller balance than average?


I ask because if your outstanding balance is, say, £50k then shifts in the BoE base rate won't affect your monthly repayments as much compared to if you had a £200k mortgage for example.


And the outstanding balance is also key in the sense that if you DID remortgage onto a fix, you'd need to consider any product fees - again, a £1k fee for example usually wouldn't be worth it on a small(er) mortgage.

getmore4less

truescot wrote: »

The fact that it's in two parts means I can't change just one half of it, so with half at 1.5% and the other at 2.74%, the effective rate is 2.12%, which is pretty competitive for a lifetime tracker, and the added flexibility swung me to not change. If I can overpay the higher rate part and pay it off, I am left with a lifetime tracker at Base +0.75%

Which lender is imposing that?
Most allow each part to be changed to new products independently.


Are the two part really the same size?
That would be unusual and not be for long as the rates are different unless the overpayments were match the extra capital paid off by the lower rate.

truescot

Thanks for the advice guys...it prompted me to phone Santander again and specifically ask about changing only the higher rate part (I'd previously phoned about switching rates and they had never offered this option so I assumed it was not possible).


The upshot of the conversation was that, no you cant just change one part BUT they have sent me an offer which is to switch the higher rate part onto the lower rate (Base + 0.75%) for the life of the mortgage, no fees and unlimited overpayments on Part 2!!


Surely this is almost too good to be true? The best Lifetime Tracker that came up on MSE's whole of market calculator was a 2.49% from Barclays.


Surely I'll never need to change now? Only 10yrs 10 months to go, mortgage remaining 103k.

getmore4less

If my memory is not fooling me that sounds like one of the A&L mortgages that Santander took over,

could have change ages ago.

Thrugelmir

truescot wrote: »

Surely this is almost too good to be true?

Locks you in as a customer. Retention of good customers may well be more important. Than winning new business which must be increasingly difficult.