LIBOR still dropping...

I can confirm in my area FTBs are booming too. I know this is not a story the press will want to run with because its not doom and gloom but I honestly think that the ecconomy isn't as bad as being made out. Unemployment is high, but that goes through cycles. My only concern is labours policy of lending their way out of debt. Thats rule number 1 not to do according to Martin Lewis.

Rates aint goin high any time soon.

The BoE arent going to risk any upward moves until there are clear signs of a recovery. In my opinion there is a long way to go before a recovery even starts.
With regard to low Fixes...where are they? or where were they? There were a few half decent with large LTVs but in comparison to the present BoE base they were hardly what you could call good. Rates could be low for a considerable time, so a decent fix would be 3 % to 3.75 for 5 years. The 2 to 3 year deals are not in my opinion to be described as good.

luckyfool wrote: »

In the scenario where interest rates rocket, the Bank of England may not have much of a say in the matter.

e.g. Iceland when they needed the IMF bailout recently they were forced to increase rates to 18% at the time.

Equally the chief economist at the Bank of England has said that if inflation takes off then they will not hesitate to increase rates back up again just as fast as they came down.

Your statement is quite confident, I personally would not want to "bet my house" on rates staying this low indefinitely, as that is effectively what you might be doing if you tie into a tracker at 2.5-3%+ above base rate now.

sure, but the base rate will be at these low levels for at least 6mths, probably 12mths....maybe longer (who knows )

and LIBORs WILL continue to fall tic by tic, day by day for plenty of time to come.

111bp over base for 3mth LIBOR is way to high, whatever way you look at it

foreversummer wrote: »

It is exactly this sort of emotive talk "bet my house" and the like that panics people and encourages them to rush into deals that may not be suitable for them.

I remember last summer the speak on this board was that rates were going "up up and away" and this encouraged many to grab any fixed rate they could lay there hands on before interest rates hit double figures.

Surely no one expects interest rates to stay low indefinitely. But clear and careful thought is required. Not rush and panic.

Foreversummer

Given that base rate is at 0.50%, there is limited upside to a tracker just now (0.50% potentially), on the other hand a reasonable medium to long term average for base rate is lets say 5%. If you are tieing in just now on a tracker at 2.5%-3% over base rate (and paying a fee for the privilege), then I would suggest that it is a relatively risky thing to be doing.


Just because some people took 5 year fixed rates a year or more ago and rates have come down since then doesn't change whether or not it was the right decision for them at the time. I get the impression from some people who are plugging the benefit of staying on variable rates or taking trackers, and trying to discourage people who are clearly worried about long term rates and their ability to afford their mortgages going forward from taking long term fixed rates, that they are effectively saying don't bother insuring your house/car, its a waste of money, it probably won't get stolen/burnt down. Not everyone can afford to take that kind of gamble and for alot of people a medium to long term fixed rate at or below what is historically a very good rate (lets say 4.5-5%) makes alot of sense. It might not be right for you, but it's the right decision for alot of people imho.