Statement of intent

StuartGMC

george_jetson wrote: »

I won't forget checking my accounts online when some expenses came through and seeing that this had nudged me into an overall credit balance. Although everyday living soon took me back down again it was quite a thrill and confirmation that I was on the 'final straight'.

George, thanks for this, it's certainly an exciting time presently, but if anything it is making me even more anxious to clear it! We'll definitely drop back when the credit card is paid next week, although with the S&S ISAs we will remain in a net positive position. However with the major balance to pay on the holiday in early May we will be close to zero again...

I'll just have to be patient

StuartGMC

Not sure what the changes are to the forum, seem to be basically a restructure but no changes to the visual aspects. What happened to that short spell when the posts improved in colour?

Anyway, today -4.50% of the "mortgage" is incurring -0.03% interest according to my spreadsheet; in other words we're in credit and will earn a little positive interest (not sure it will be measurable!) for a few days :T

In addition to the OP to mortgage, I've transferred £811 to the savings so just £101 to go at month end. This £101 is on direct debit to get the NatWest £50 in June or July. This has raised our savings to their highest level I can recall, which is really nice to see.

In addition, our S&S ISAs (Funds ISAs) have picked up on the back of the global upswing following the G20 outcome, so now the loss is only 34.9% but the data from my portfolio monitored via Trustnet has some nice graphical changes (more lines going north!) and some interesting comparisons of the collective performance of the portfolio vs other benchmarks (you can select from markets, sectors etc). At this moment, it seems to vindicate the continuing monthly investments, although there are still some doomsayers out there (if you saw Bloomberg today you'll know this) whilst others are more bullish.

It is fun isn't it trying to predict what will happen next; should you be in cash, equities, gold....

In summary we have probably our best financial situation for many years, although I still can't think of the £190k or so that is our part of our home as part of these assets. Tto me, this simply gives us a roof over our heads which will very soon be all ours.

One further positive comment is that at least SpecSavers have resolved the issue of the lens in my glasses, so I hope that in future all will be "more straightforward" when the prescription changes provided they stick to the centralisation of the present prescription.

gallygirl

Well done on positive balance :T, also on funds. What with stock market movement and news of house price increases this week (albeit 1 co. only) I think maybe....... ........ (don't want to tempt fate by writing the words )

StuartGMC

GG
Many thanks for that; as you say, mustn't put anything in writing about signs - there is still a strong chance of a frost at the moment which can kill such tender things

Personally, I still think 2009 will be roller-coaster and we'll not see real trends until Spring 2010. However, that's good because I hope to be buying units in our ISA Funds cheaply and it is these which will return the most significant growth to counter the units from 2006-2008 which of course are the ones which cost so much. more. Conversely, if we stay away from these until the signs are proven, then the majority of gains will have taken place already and you'll miss out - assuming you believe as I do that the market economy will continue.

RosieTiger

Stuart, can I ask - what's your view on interest rtaes over the next 2 years ?

StuartGMC

RosieTiger wrote: »

Stuart, can I ask - what's your view on interest rtaes over the next 2 years ?

I'm glad you asked for view and not advice

As I perceive it, there are two camps for the short term, say to Q2 2010:

a) Those who believe we will experience deflation - impact on our mortgage rates is likely to be minimal with BoE base rate so low. It will mean our savings "grow" in real terms as they will be able to buy more even if they don't actually increase as interest rates are so low, or,
b) Inflation will start to ramp up quickly with the QE (quantitative easing) taking effect and Governments needing to fund their borrowing. Now we hit the nub of the question - what rate can we anticipate? Certainly I would think that interest rates of 8% can be considered as likely in mortgage products offered from an historic perspective, but when is a bigger question. I can only note as previously that we started our mortgage at 8% in 1994, and then it went up. With 13% being a typical mortgage rate in the previous 15-20yrs, we used this to gauge that we could still (just) afford the repayments.

The issue is one of timing and both could happen sequentially. That said, I think there is agreement that the interest rates charged now are historically the best we've seen for mortgages i.e good to fix long term if you need to.

So as above for the next 2yrs per your specific question, I think 2009 little change, but increasing rates in 2010 from Spring on. (Should this be bookmarked for "Stuart's almanac"?)

For mortgages left with 2yrs I think the impact will be minimal, but assuming you have several years left on the mortgage then one is faced with some interesting questions:

1) If you are on a tracker you are then in the game of trying to judge when rates are about to rocket and move very quickly to a fixed rate before these jump. However, rates and offers can change overnight, so will you be able to secure the best rate or opt to lose a little but in the meantime benefit from your present tracker?

2) If you are on SVR or coming out of a fixed product, then you will presumably need to think about how much longer you will have the mortgage, and what limitations on OP etc you are happy to live with so you can get a good fixed rate?

I suppose we are lucky because we hope to clear our mortgage in October (assuming no major unforeseen issues) and thus our focus will be moving to saving and investments. Of course, higher interest rates are great for savings, which is why I only fixed daughter's Post Office bond for 12 months and not longer because the 3.40% she is receiving may well be improved upon from early 2010. It was one of the aspects we discussed with her (11yrs old) in selecting the best option in getting a good rate.

The above are only my thoughts and in no way are they any form of recommendation!

StuartGMC

In addition to the reply to RT above, I thought a separate note was warranted on the interest rates. I was completely surprised to find a letter today from NatWest to state they dropped the offset interest rate from 1 April from 4.00% to 3.75%

So having noted here my displeasure at them not passing on the cuts at least this is a step in the right direction; was it driven by Government involvement?

Anyway the upshot is that our minimum payment has dropped from £253 to £239 per month. So our OP is now £411 for each £650 we pay per month i.e. 171.97% overpayment.

Although today we are net positive (so we earn 0.01% interest equivalent) we won't be tomorrow when the credit card payment leaves the current a/c, and it will mean about 0.33% equivalent mortgage interest rate until OH is paid on 15 April.

Do I dare put a negative interest rate in my signature once we are 100% offset permanently or would that offend?

RosieTiger

Stuart, that was very useful. You confirmed our thoughts. We are on a tracker which is at 0.58 over BoE, giving us 1.08%.
We have good disposable income and plan now to clear our full mortgage - if the spreadsheet is right and we continue as we are doing ( yes, that's two if's !!!) - in 3 years.
On that basis, we have opted to stay with the tracker at the moment and gauge current low rates as the better option for ourselves personally, ove rthe scurity of a low(ish) fix.
Thanks for your views and congratulations on where you have got to - totally different methodology, but great result !

StuartGMC

RT
Yes, you can arrive at the same destination via different routes, best wishes for your shortened journey.

I am getting impatient to clear the mortgage now, and it is probably driven by a distinct feeling that I am missing out on the opportunity to buy a lot of units for the funds in our ISAs whilst they are so cheap. However, it would be crazy to back off from clearing the mortgage to allow us to increase investments which carry risk, so I'll just have to accept the situation!

I've also had OH "remind" me that there are quite a few expenses to come before I can "waste" money on an XF; we need to replace our bed and furniture in the bedroom, DD similarly needs her room "upgrading" as she moves to secondary education this year, decorating through lounge and hall/stairs plus carpeting and in addition we need to replace our lounge furniture....

....however, these I am deferring until we clear the mortgage although we may slap some paint through hall and stairs as a temporary measure (but the carpet also needs replacing thanks to the new cat "helping" it on the way at two worn spots on the stairs! :mad: how long would a new carpet then last?).

Oh well, best laid plans.... perhaps I'll stroll by the Jaguar web site with a cup of tea and dream a while.

StuartGMC

StuartGMC wrote: »

However, just noted the Sheraton didn't credit me with any points on their loyalty scheme so will try to claim back online. Annoyingly hotel booked via conference and the loyalty details entered but I failed to check they had them on check-in - that's the problem when shattered after trans-Atlantic and an early start to the day.

Starwood Preferred Guest got back to me very quickly, simply asking that I send them a copy of the hotel bill (luckily took copy before submitting expense claim at work) and that I should receive the points... 2470 which is just under the 2500 minimum necessary to transfer to my frequent flyer card for miles. Not many Sheraton hotels in UK or Europe so switching to miles is probably the best thing to do.

I will be earning points though in the Marriots in Houston and Denver, so I may be able to work up enough for a family weekend break. I am considering getting a Marriott Visa card rather than continue using NatWest yourpoints (will need to cancel latter then otherwise £3 a month charge if spend is too low). Still not quite sorted, but most cashback deals after the initial 3month on Amex look pretty useless too.