After the immediate chaos resolves is 4-5% interest rates going to be the new norm - Fix now?

big_vern

Currently on a 2 year tracker with 18 months left, been offered 4.23% 5 years, (They have withdrawn that product as of today but am told I am told I still have the offer)
Tracker is 2.86% below Mortgage companies SVR, £1500 erc.

I don't intend to move, historically it seems b of e base rates have usually been above inflation (obv not recent history)

Also - another thought is the impact of the next General Election (2024 ?), a 5 year fix would give some stability through that period?

In my position I could ride out to 7-8% interest rates but not much higher, I figure whats they point if they only go back down to 4% ? 

I used the 4-5% as that seems to be what some economists are suggesting will be the new norm, and Martyn Lewis parroted that is a possible scenario on his bbc podcast (NB he didn't say it was more likely or not than any other scenario)

thoughts appreciated,

Saint84

i think it all depends on your risk appetite. I fixed mine at below close to 3.5% a few weeks ago and paid a ERC for the pleasure of doing so.

housebuyer143

You are on a discount, if it's a percentage off the SVR. The problem with discount is it isn't directly linked to base rate. Lenders set their own rates and it's discounted off that. I would rather know my payments go up and down with the base rate. 

I think 6% is what they are saying the base rate might get to and I am not convinced tbh. I can't fix at the current rates, I just won't do it, so will carry on with my tracker and see what happens. 

4.23% is a fair offer. Would I take it for 5yrs, probably not. But I would have jumped at it if it were for 2. 

PK_London

4.23% is an excellent offer in this market. You can always overpay do reduce the 'actual' interest you are paying. I've read a lot into base rate rises and mortgage rate forecasts and I can see them peaking at 7% next year and settling at 6% in 2024 and maybe dropping to 5% in 5yrs time. Longer terms they will probably land between 3-4% if inflation is tamed by then but these are just my thoughts based on what I have read.

london21

Think we would not have the 1% rates for some time now, looks like 3-4% will be the norm going forward.

ader42

Current normal mortgage fix rates now seems to be 6%.

When BOE base interest rates rise in November and again in January etc. expect the mortgage rates to rise to follow suit. 

Average long-term BOE base rate is 6.8% so a fair way to go up yet… 

[Deleted User]

I'd be amazed if they went as low as 4% in the foreseeable future.

[Deleted User]

House prices when rates were high in the past was very different to now.

I secured mortgage in June for 2.88% 35 years mortgage house costing £490,000.
Same mortgage term now 5.14%  monthly payment £1885 from £1390 an increase of 36%.
Over 5 years £29,700.

In the short term interests rates will be high but once inflation reduces, think rates will start getting lower but not 1% again.