Simple interest rate question

webdigga

Hi,

I have 2 Nationwide mortgages (for the same property), one of which is coming to the end of its fixed rate in Jan, and one that comes to the end of its fixed rate in Feb.

Nationwide allows me to switch/lock in a new rate 5 months before the end.  So that would be Sep 1st and Oct 1st respectively.

So in an ideal world I would wait until Oct 1st and lock them both in to a new rate paying a single product fee.  Second mortgage has an early repayment charge of £900.

My concern is that another interest rate rise will happen in September.  Question is:-

1. When the Bank of England raises the interest rate is there normally a few days in advance where I would know this is going to happen, or does it always just come as a surprise on the day?

2. If it is just a surprise on the day, is it feasible that I could ring Nationwide on the day of the rise and lock myself in before they have a chance to put their rates up?

Dazed_and_C0nfused

1.  It's not a surprise and you could know about it the moment it is announced like everyone else.

https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2022/september-2022

2.  It's feasible but the rates available today may have long since gone by 15 September.  Or be pulled at close of play on the 14th.  Or first thing on the 15tg, before the interest rate decision is announced.

But it doesn't take a rocket scientist to be betting on rates increasing in September.

K_S

webdigga said:

Hi,

I have 2 Nationwide mortgages (for the same property), one of which is coming to the end of its fixed rate in Jan, and one that comes to the end of its fixed rate in Feb.

Nationwide allows me to switch/lock in a new rate 5 months before the end.  So that would be Sep 1st and Oct 1st respectively.

So in an ideal world I would wait until Oct 1st and lock them both in to a new rate paying a single product fee.  Second mortgage has an early repayment charge of £900.

My concern is that another interest rate rise will happen in September.  Question is:-

1. When the Bank of England raises the interest rate is there normally a few days in advance where I would know this is going to happen, or does it always just come as a surprise on the day?

2. If it is just a surprise on the day, is it feasible that I could ring Nationwide on the day of the rise and lock myself in before they have a chance to put their rates up?

@webdigga There's no way of knowing for sure but the general expectation (at the moment) is that the most likely outcome for the 15 Sep meeting is another 0.5% rise. 

Rate changes by lenders don't automatically follow after a BOE rate rise. For example, the 4th Aug meeting raised rates by 0.5%. Nationwide only changed its fixed rates (a selection, not all of them) only on 25th August.

Otoh, when rates went up by 0.25% on 16 June, Nationwide hiked most fixed rates by up to 0.4% on 17 June.

If your circumstances are such that you can remortgage (change lenders), you could always get a remortgage offer valid for 6 months and compare that to what rate-switch rates Nationwide offers on 1 Oct.

webdigga

Thank you both for the replies.

Unfortunately I started a new job and at the moment I only have 1 payslip, so this might make it tricky to switch providers at the moment.

I think I might have to lock in to a new rate on 1st September then and take the hit on the early repayment charge on the second mortgage.  If Nationwide increases their rate anytime in September then I think I'll probably lose more than the 900 over the course of the 5 years fix I'm going for.

Thank you both!

dimbo61

If you give details ?
Mortgage balance ?
Years left on mortgage ?
Rate you can get now some clever people on here can work out what the rate would need to increase before taking the hit on the £900 ERC 

todayisagreatday

webdigga said:

Thank you both for the replies.

Unfortunately I started a new job and at the moment I only have 1 payslip, so this might make it tricky to switch providers at the moment.

I think I might have to lock in to a new rate on 1st September then and take the hit on the early repayment charge on the second mortgage.  If Nationwide increases their rate anytime in September then I think I'll probably lose more than the 900 over the course of the 5 years fix I'm going for.

Thank you both!

We just remortgaged to first direct and at the time my wife had been in a new job 3 days! They just asked for her contract and terms and conditions. She won't have a payslip until the end of August and it wasn't a problem with First Direct. We both earn around £50k though and our remortgage was for £199k.

K_S

webdigga said:

Thank you both for the replies.

Unfortunately I started a new job and at the moment I only have 1 payslip, so this might make it tricky to switch providers at the moment.

@webdigga That's unlikely to be a show-stopper as plenty of mainstream lenders are happy to consider lending in a new job based on 1 payslip, day 1 based on a employment contract and even based on an employment contract starting in the next few months. So it might be worth checking out that option as well.