Rate drop implications. Advice sought.

swebber

Fixed deal runs out in October. so wanted to get paperwork rolling. We go through a broker, who has found us a Halifax deal at 4.29%.

Now interest rates have dropped, will it be worth holding on a month or so, just to see if the mortgage companies offer anything better?

I had heard that companies had already dropped rates lower, in expectation of BoE dropping theirs.

So should I go for Fix now or hold on?

dadrock

Last night on the radio they mentioned a bit about companies already building the new rate in.
The finance journalist reckoned that its only the saving rates that have received it, plus a few uncompetitive mortgages.

MortgageGenie

The Halifax rate you've mentioned is a very good product for larger loans. As to how today's BOE reduction will impact the current fixed rates, we should start to find out in the next few days/weeks however most people tend to agree that 1 if not 2 BOE cuts have already been priced in. Certain quarters believe the BOE rate could go below 4.00% next year but this view could change rapidly if the economic data strengthens (it works both ways).

Your personal circumstances should really dictate your best course of action... Does your budget allow you to be on a tracker product? What if you lock into a tracker and rates start to rise, would your mortgage still be affordable? Should you wait to see if better fixed come around? Well, you'll have to weigh up how much extra you'll be paying each month by delaying your decision. Many other factors will also come in to play etc...

KTF

swebber wrote:

So should I go for Fix now or hold on?

It really depends on your circumstances and how much 'risk' you want to take.

Whilst the BoE rate could drop further, it could also go up again and fixed rates are still very low historically.

Even with the rate cut today you can still get a fixed rate deal that is cheaper than a tracker (Nationwide 4.39 fixed v 4.49 (taking the cut into account) tracker). Of course, if the rates drop again then the tracker will be better but who is to say when and by how much the rates will drop (if indeed they do).

My mortgage is up for renewal in October and I will be going fixed as I prefer to know the amount that is going out each month and believe that rates will remain around the current level for the next couple of years.

swebber

Thanks for pointing out that I should also be taking into account affordability, this is my first mortgage on my first house and we had a two year deal which went a bit wrong.

Fix for one year - payment £479

Second year tracker - payment £644.

Not touching a tracker, so it's a fixed dealf or me. Most people seem to agree that the mortgage companies won't be changing their deals, so I'll probably leave it a week and then get onto the paperwork, it will be a while before we get all of that done anyways, so can always change our minds if something better comes along.