Mortgage Rates - 1st March

pollyanna24

When I rang up Nationwide yesterday to try and get my head around arranging a new mortgage as my fixed is up at the end of April, I asked the lady why their website still shows their tracker mortgages at the rate before before the interest rate decision, i.e. +0.68% as 6.18%. She said that the mortgage rates do not take effect until 1st March.

I held off arranging a new mortgage there and then in case this also applies to their fixed rates mortgages. Am I am la la land or they also likely to see a decrease (albeit I appreciate by probably not the full 0.25%)? I'm looking at the loyalty switcher (no fee!:D ) at 5.63% for five years.

UK007BullDog

I am in the same boat. I am looking at the loyalty switcher 5 yr fixed at 5.63% and am holding off as I am hoping their fixed will decrease as well, if even just a little. However I have seen some of the banks change their rates and they are increasing their trackers and some of the fixes even after the BOE reduction.

So I am torn between what to do. Wait and gamble or go for it and "lose out" if they do decrease their fixed rate.

pollyanna24

Hmm, know the feeling. I am also tempted by the trackers on their website as you can change to a fixed at any point and there is no fee on either the tracker (at least the one I was looking at) or the fixed (if you are already a customer).

The tracker I am looking at is +0.68% at the mo, so 5.93%, still slightly more than the fixed.

I don't think I will leave it much longer. I would rather have something in place rather than risk it. I will see what happens on 1st March I think and then just fix. 5.63% is not a bad rate, so even if rates go down, just thank my lucky stars that I have a mortgage I can afford!

Dick_here

I wouldn't have thought it likely that as the SVR goes down by .25% they'll put up the rates on Fixes etc, the bad publicity alone would prevent it surely.

hangover

I don't think it is very likely that Nationwide will reduce their fixed rates next month. Fixed rate offers tend to be based upon long-term expectations and in the light of the recent announcement by the BOE about limited future rate cuts, it seems unlikely that the fixed rates being offered will fall in the near future.

The "loyalty" deal that Nationwide are offering, while pretty decent, appears to be a bit of a sop. I don't think Nationwide really care about existing customers like they used to (I've had a mortgage with them for 7 years but am now remortgaging) given that they have started offering better tracker deals to new customers than those available to existing customers. So I don't see them having much incentive to improve this deal (in fact, I wouldn't be surprised if they withdrew it and then offered a lower fixed rate to new customers only).

That said, according to a recent article in The Times: "Fixes are currently higher than they should be, with lenders reaping discounts on the wholesale markets that they are not passing on to borrowers. So brokers say there is room for lenders to reduce them if they want to increase their position in the best-buy tables." So if you are prepared to shop around and take into account any fees involved you might find a substantially better fixed rate elsewhere.

pink_muppet

surely with a tracker mortgage it doesn't matter when you take it out as it will track the base rate whatever that may be at the time?, unlike a fixed product where the interest rate is fixed for the period of time you take it out for irrespective of the base rate, or am I missing something?

Rick62

As hagnover says, Fixed rates are determined by market expectations, or swap rates. On 8th Feb the 5 year swap was 4.87% but on the 12th it had risen to 4.95%. So if rates are increasing then it is less likely that the bank will reduce their fixed rate.

Also they do not move with the bank base rate, as you can see they are already below the base rate in the expectation that base rates will reduce in the future.

UK007BullDog

I phoned Nationwide and they are keeping things very close to their chests.

They will know 48 hours before the 1st of March as to what will happen.

I am not going to switch lenders as the mortgageis too small to warrant a move. Its not the best interest rate but it will do. Also I have extra borrowing which is also fixed and if I move I would have to pay a penalty.

Having said that I might take on the penalty but only for a really good rate, but cannot see it happening in the very near future.

andrewf_2

Ive been with Nationwide for every year I've owned my house bar one year of a C&G mortgage that had a no redemption charge get out facility.

I've always found them to be a good deal and as my 4.45% fixed finishes end of March, I've been waiting to see if they change their 'loyalty' rate.

Thing is after using all of the sites in Martins guide on mortgages, thier 5.63% rate doesn't seem all that great.

First Direct for example are doing a 5.25% fixed for two years rate. even with their £99 fee and Nwide's £90 leaving fee, that still going to be cheaper a month AND saved me several £100s over the two years.

I'm not sure the loyality rate is all that loyal

UK007BullDog

Well I have my extra borrowing to consider and I would not be saving by moving.

FirstDirect are not stating (or I could not find it) if there are any other costs involved moving the mortgage to them. What about survey and legal fees?

sloth

£99 valuation fee (doorstep) and no legal fees if you are remortgaging