Bank of England's base rate, will it fall?

Joto_2

Hi Thanks for all the tips on this site.
I've taken all the advice and I'm hoping to move my mortgage to a better rate.
I've found a tracker mortgage with First Active that looks very good. It's rate is 4.75% until 2010, but the tracker will not fall any further than 4% even if the base rate does fall further.
So back to my question - anyone any thoughts what it will do in the next 5 years??. This deal also has free solicitors fees, valuation fees etc .
The only fee is £399 admin fee. It's not portable as such but provided you take another mortgage out with them for the same or larger amount then there is no redemption fees to pay.
Is it a good gamble??

Lemoncurd

Don't want to try and predict what is going to happen to the base rate over that time but we're in the process of taking out their 3 year version of this which still tracks the actual base rate but doesn't have the 4% floor.

gogsboy

Joto wrote:

Hi Thanks for all the tips on this site.
I've taken all the advice and I'm hoping to move my mortgage to a better rate.
I've found a tracker mortgage with First Active that looks very good. It's rate is 4.75% until 2010, but the tracker will not fall any further than 4% even if the base rate does fall further.
So back to my question - anyone any thoughts what it will do in the next 5 years??. This deal also has free solicitors fees, valuation fees etc .
The only fee is £399 admin fee. It's not portable as such but provided you take another mortgage out with them for the same or larger amount then there is no redemption fees to pay.
Is it a good gamble??

One of the Nationwide trackers might be better for you.

There is ones with reservation fees and ones without.

http://www.nationwide.co.uk/mortgage/interest-rates/homebuyers.htm

They can go as low as 2.75% should the base rate ever drop that far

Joto_2

gogsboy wrote:

One of the Nationwide trackers might be better for you.

There is ones with reservation fees and ones without.

http://www.nationwide.co.uk/mortgage/interest-rates/homebuyers.htm

They can go as low as 2.75% should the base rate ever drop that far

I'll check this out Thanks for the help

Joto_2

Lemoncurd wrote:

Don't want to try and predict what is going to happen to the base rate over that time but we're in the process of taking out their 3 year version of this which still tracks the actual base rate but doesn't have the 4% floor.

Thanks for the advise I'll go back and have a look I don't think I saw this one

dccarm

The two and three year base rate trackers aren't there anymore. I think they are at .25% above the base rate.

And to answer your original question, I have no idea if they will fall. I can't see them falling below 4% though. I have just applied for the same mortgage on the basis that it appears to be the lowest tracker out there. If the rate falls below 4% you lose out in the same way that someone on a fixed rate would, but at 4% it's not particularly offputting.

My big concern is the fact that I expect to move some time in the next 5 years and I'm going to be fairly limited in my choices when I move. I just hope First Active have a decent selection of mortgages when it happens.

lisyloo

Roger Bootle of Deloitte predicts they'll be at 3.5% by the end of 2006.

Of course he could be wrong like all of us, but he is a top economist so I would put more weight on his views than others on this board (unless they can reveal they are top economists too).

I think it's possible that it will go below 4%.

meanmachine_2

lisyloo wrote:

Roger Bootle of Deloitte predicts they'll be at 3.5% by the end of 2006.

Of course he could be wrong like all of us, but he is a top economist so I would put more weight on his views than others on this board (unless they can reveal they are top economists too).

I think it's possible that it will go below 4%.

And as many economists are now predicting rises.

It's impossible to know.

But you MUST look at the international picture, where US rates are soaring and oil prices are going through the roof. If you look at today's Mail yo'll see that a rate rise is possibly on the cards.

The Bank of England's job is to control inflation and there are major inflationary pressures filtering through right now.

Personally I wouldn't expect rates to rise above 5.5% or fall below 4% in the next 2-3 years, but none of us really knows.

Just six months ago these same economists were telling us that rates would be at 5.5% by now.

lisyloo

And as many economists are now predicting rises.

Do you have a link or source for that as I'd be very interested.
I agree with you that none of us knows.

there are major inflationary pressures filtering through right now

This isn't the Bank of Englands view as per their latest inflation report which came out in May.
What do you think the major inflationary pressures are at the moment?

If you look at today's Mail yo'll see that a rate rise is possibly on the cards.

Any chance of a link to that article?
I had a look but couldn't see it.
I would be interested in reading it.

Just six months ago these same economists were telling us that rates would be at 5.5% by now.

I totally agree with you that it's very unpredictable.

alared

As the old saying goes "put four economists in a room and they`ll come up with five different answers".

meanmachine_2

lisyloo wrote:

I think it's possible that it will go below 4%.

Highly unlikely.

They only fell below 4% last time because US rates were at an historic 1%. Now US rates are above 3% (and rising), we need to stay ahead of the US to protect our currency.

That's obvious, even to a layman like me.