Base Rate / 5y fix

thriftypatos

Looking to do a 5y fix on a loan of £260k. Do we fix now, or wait until the MPC meeting at the end of March on the off-chance base rate is cut further? If base rate does get cut, do banks immediately reflect that in their mortgage pricing?

Thrugelmir

Only if it's a product that's linked to the BOE base rate (and has no minimum collar).  

thriftypatos

Thanks. Any idea if Natwest's 5y fix will go down if base goes down?

kingstreet

Unlikely. The link between mortgage products and base rates is tenuous at best. Products are based on rate swaps which largely reflect forecasted interest rates months or years ahead.

Thrugelmir

thriftypatos said:

Thanks. Any idea if Natwest's 5y fix will go down if base goes down?

Base rate doesn't directly drive the lenders own interest rate. To offer a 5 year fix , a lender will need to secure funds to back to back the transaction. Thereby securing it's gross lending margin. Banks aren't speculators when it comes to fixed interest product offerings. 

amnblog

The way to get a saving on the Nat West 5 year rate is to use a Broker

thriftypatos

amnblog said:

The way to get a saving on the Nat West 5 year rate is to use a Broker

Thanks. But we have to use Natwest because we are currently locked in to a 2y product with them, which we are porting. We want to do a 5y fix on the remainder (i.e. the additional, new loan to finance our new home). My understanding is we can't look to another provider as they would have competing interests in terms of priority of mortgage?

JimmyTheWig

The price they are offering for a 5 year fix now will have factored in the chance of a rate drop coming up. Unless you rate your prediction of a rate drop more than you rate Nat West's prediction of a rate drop you have nothing to gain by trying to "time it right".

getmore4less

thriftypatos said:

amnblog said:

The way to get a saving on the Nat West 5 year rate is to use a Broker

Thanks. But we have to use Natwest because we are currently locked in to a 2y product with them, which we are porting. We want to do a 5y fix on the remainder (i.e. the additional, new loan to finance our new home). My understanding is we can't look to another provider as they would have competing interests in terms of priority of mortgage?

You use a broker to get a better deal with natwest. 

kingstreet

thriftypatos said:

amnblog said:

The way to get a saving on the Nat West 5 year rate is to use a Broker

Thanks. But we have to use Natwest because we are currently locked in to a 2y product with them, which we are porting. We want to do a 5y fix on the remainder (i.e. the additional, new loan to finance our new home). My understanding is we can't look to another provider as they would have competing interests in terms of priority of mortgage?

A broker can handle a NatWest port for you.