Average fixed-rate mortgages to go up again - highest in a decade

m00m00

they'll be much better off over the term of the mortgage if they go in at a 20% lower price.

interest rates change all the time, purchase price is fixed at the point of purchase.

mr.broderick

m00m00 wrote: »

they'll be much better off over the term of the mortgage if they go in at a 20% lower price.

interest rates change all the time, purchase price is fixed at the point of purchase.

Obviously so what is the point of the thread, what is the point here?

mr.broderick

m00m00 wrote: »

they'll be much better off over the term of the mortgage if they go in at a 20% lower price.

interest rates change all the time, purchase price is fixed at the point of purchase.

Anybody who's borrowed money at 4-5% fixed for 2 years for example who cannot afford the payments at 7% deserve everything they're going to get.

m00m00

mr.broderick wrote: »

Anybody who's borrowed money at 4-5% fixed for 2 years for example who cannot afford the payments at 7% deserve everything they're going to get.

agree 100% with this


I'm not a fan of short term fixes at all, particular ones with high product fees

they are designed for the numerically illiterate

WTF?_2

m00m00 wrote: »

agree 100% with this


I'm not a fan of short term fixes at all, particular ones with high product fees

they are designed for the numerically illiterate

They're no different to the 'teaser' rates in the US that have caused such sub-prime misery.

If you do the sums then, even assuming you could still keep remortaging to a new 2-year fix ad-infinitum, you can see that you could never pay off the mortgage as you end up paying back next to no capital.

m00m00

and for those people who actually roll up the sometimes 4 digit product fees into the loan, could actually end up increasing their LTV rather than reducing it, assuming 0% hpi, let alone a declining market.

JonnyBravo

!!!!!!? wrote: »

They're no different to the 'teaser' rates in the US that have caused such sub-prime misery.

If you do the sums then, even assuming you could still keep remortaging to a new 2-year fix ad-infinitum, you can see that you could never pay off the mortgage as you end up paying back next to no capital.

Rubbish, this is a complete fallacy.

I suggest you follow your own suggestion and "do the sums" or look at the amortization schedule of a mortgage before you spout this claptrap.

Changing to a new 2 year deal every 2 years doesn't mean you're not going to pay back the capital. The capital you pay naturally increases as your term (and debt) reduces. Only if you changed something "intrinsic" (can't find the right word here) in the mortgage eg keep extending the term, would this situation come about.

Of course the fees do get added but the "teaser rate" as you put it more than offsets that, otherwise no-one would take one... well ok some people would but I wouldn't and I have had a 2 year deal in the past.

WTF?_2

JonnyBravo wrote: »

Rubbish, this is a complete fallacy.

I suggest you follow your own suggestion and "do the sums" or look at the amortization schedule of a mortgage before you spout this claptrap.

Changing to a new 2 year deal every 2 years doesn't mean you're not going to pay back the capital. The capital you pay naturally increases as your term (and debt) reduces. Only if you changed something "intrinsic" (can't find the right word here) in the mortgage eg keep extending the term, would this situation come about.

Of course the fees do get added but the "teaser rate" as you put it more than offsets that, otherwise no-one would take one... well ok some people would but I wouldn't and I have had a 2 year deal in the past.

I think you'll find that when you take into account the hefty 'arrangement fee' (which borrowers typically roll into the loan) and realise that the whole deal is 'front end loaded' you'll see that nett, you are very little better off after the first two years. Especially since there will be another arrangement fee for the next 'deal and even if you go to SVR there's often a fee payable then too.

moanymoany

I would like to see the mortgage rate kept below 10%, a home for people is the most important thing in life.

However, to compensate, I would let loan rates go higher. Debtors seem to be able to afford the high rates of store and credit cards, so let them pay. The things bought with the cards and loans are very often not essentials. If you have no debt and can't save an emergency fund to replace the washing machine or fridge, then that small amount on the credit card isn't going to cripple.

IveSeenTheLight

carolt wrote: »

The average interest rate on a two-year fixed rate mortgage will soon rise above 7 per cent, according to moneyfacts.co.uk, a financial product comparison service.

And it may get even higher.
I wonder what would be best,

fix the rate before they get higher
or
go with discounted / tracker BoE rate until they get as high as the fixed rate (may result in being a much higher fixed rate than current 7%)