Is it a good time to buy a house and fix the interest rate for as long as you can?

GDB2222

Snookie12cat said:

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

Think if it this way, even if they go up 0.5%, its still some of the cheapest money you will ever borrow (especially if you have a good LTV) and it will make more invested in a house than it ever will just sitting in your bank. Its never been a better time to have debt as long as you can afford it. I am buying a much larger home, solely because investing in property is normally a safe bet, especially if you plan to hold it for a decade or more. I have never seen property prices drop over the long term. 

The longer you lock in for the more you pay initially, so are you really saving in the long term? I tend to do 2yr fx or trackers and then just re-mortgage when the time comes. Although the rates will rise, I do not believe it will be by loads, so I am happy to take the risk rather than be tied into a higher rate.

"The longer you lock in for the more you pay initially, so are you really saving in the long term?"

It's not just that, though. There's also the risk that rates go up so much that you struggle to pay it. 

Unless you were in the housing market in the early 1990s, you'll have forgotten what it was like when interest rates were 12% for a prolonged period. 

Snookie12cat

GDB2222 said:

Snookie12cat said:

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

Think if it this way, even if they go up 0.5%, its still some of the cheapest money you will ever borrow (especially if you have a good LTV) and it will make more invested in a house than it ever will just sitting in your bank. Its never been a better time to have debt as long as you can afford it. I am buying a much larger home, solely because investing in property is normally a safe bet, especially if you plan to hold it for a decade or more. I have never seen property prices drop over the long term. 

The longer you lock in for the more you pay initially, so are you really saving in the long term? I tend to do 2yr fx or trackers and then just re-mortgage when the time comes. Although the rates will rise, I do not believe it will be by loads, so I am happy to take the risk rather than be tied into a higher rate.

"The longer you lock in for the more you pay initially, so are you really saving in the long term?"

It's not just that, though. There's also the risk that rates go up so much that you struggle to pay it. 

Unless you were in the housing market in the early 1990s, you'll have forgotten what it was like when interest rates were 12% for a prolonged period. 

100%. It's an about your attitude to risk I suppose and what you think will happen and how well you could burden the increase. 

I don't think the government can allow base rate to go up that much because they know a huge amount of people will lose their homes, even if it goes up a small amount. I feel like the increase will be small and incremental, but I'm not a psychic so it's all a guess on my part. 

Getting_greyer

I got a fiver says mortgage rates will be slightly cheaper in June 22 compared to right now. I'm usually wrong tho...

steampowered

When you "fix", you are not paying today's interest rates.

What happens is that the bank goes into the market and buys an "interest rate hedge" which pays out when interest rates increase. You pay for this. That is why you have a higher interest rate on a fixed rate mortgage. The longer the fix, the higher the interest rate. To put it another way - you are paying out for what the market thinks interest rates will be in future.

Actual changes in interest rates might be above, below or the same as what you pay on a fix. There is no way to tell.

There are lots people who thought "interest rates can only go up" and took out a 5 year fix over the past 3-4 years. In fact interest rates have gone down and those people have lost out.

Crashy_Time

Interesting.

Crashy_Time

https://www.msn.com/en-gb/money/other/christmas-crisis-for-homeowners-as-mortgages-increase-by-thousands-of-pounds/ar-AARihE5

Getting_greyer

Christmas  crisis !!!!

Hedgepigs

Oh gosh! How will people afford a turkey this year if mortgage payments go up a couple of quid a month?! 

Increased mortgage rates of course mean paying more over the entire term, but I don't think anyone will be cancelling Christmas over it just yet!

lookstraightahead

I think lots of people are optimistic because they've never experienced high interest rates.

lookstraightahead

Snookie12cat said:

GDB2222 said:

Snookie12cat said:

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

Think if it this way, even if they go up 0.5%, its still some of the cheapest money you will ever borrow (especially if you have a good LTV) and it will make more invested in a house than it ever will just sitting in your bank. Its never been a better time to have debt as long as you can afford it. I am buying a much larger home, solely because investing in property is normally a safe bet, especially if you plan to hold it for a decade or more. I have never seen property prices drop over the long term. 

The longer you lock in for the more you pay initially, so are you really saving in the long term? I tend to do 2yr fx or trackers and then just re-mortgage when the time comes. Although the rates will rise, I do not believe it will be by loads, so I am happy to take the risk rather than be tied into a higher rate.

"The longer you lock in for the more you pay initially, so are you really saving in the long term?"

It's not just that, though. There's also the risk that rates go up so much that you struggle to pay it. 

Unless you were in the housing market in the early 1990s, you'll have forgotten what it was like when interest rates were 12% for a prolonged period. 

100%. It's an about your attitude to risk I suppose and what you think will happen and how well you could burden the increase. 

I don't think the government can allow base rate to go up that much because they know a huge amount of people will lose their homes, even if it goes up a small amount. I feel like the increase will be small and incremental, but I'm not a psychic so it's all a guess on my part. 

They didn't care much in the past. You can't buy a house thinking that the government will look after you. I've never been looked after and have seen massive interest rate hikes and negative equity,