10yr fixed mortgage? help ftb

lttlejoe said:
The problem is that interest rates are being artificially held down mostly for political reasons, rather than market reasons. No government wants to be seen as the one which puts interest rates up so high that people lose their homes.
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Sorry but that is complete BS

Interest rates are set by the Bank of England these days - the reason for this is explicitly to avoid political interference. The current governor is the same one who served under the previous Labour govt - politics has got nothing to do with it.
 
As for the OP - there is nothing to say that interest rates *have* to go up to some of the more insane levels of the past - if it was a certainty then your fix would cost a lot more - we probably are due a rise at some point this year however I wouldn't have thought we'd quite see 5% in the next 2 years.

As for the next 10 - nobody knows - tis certainly possible and rates are very low anyway so fixing at 5% isn't necessarily going to harm you - there is however a chance you could turn around in 10 years time and feel that you've wasted money. Then again if you're risk averse then paying a bit over the odds now might give you more peace of mind and you'll of course have bragging rights should interest rates go significantly above 5% in a few years time.
 
hmm on the news yesterday strangley enough they were talking about intrest rates, they said its due to go up 1-2% by this time next year, so someone said theyre on about 3% earlier in this thread i think, so if these predictions are true, intrest will be about 4-5% on a tracker
 
dowie said:
Sorry but that is complete BS

Interest rates are set by the Bank of England these days - the reason for this is explicitly to avoid political interference. The current governor is the same one who served under the previous Labour govt - politics has got nothing to do with it.
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Yeah right! Which fantasy world do you live in?

Have you looked at the current inflation rate figures?
To reduce inflation, interest rates need to be realistically raised to reduce spending on imported goods to keep the budget deficit down which is currently running at around £27 billion every three months. The only way in which this deficit can be financed is through further borrowing.

If interest rates rise too quickly, which they could well do if the BOE was fully allowed to do their job, up to 3 million current homeowners could well lose their homes by repossesion due to being over their heads in debt and unable to meet their mortgage repayments...are you really telling me there is NO political influence being applied here?
 
lttlejoe said:
Yeah right! Which fantasy world do you live in?

Have you looked at the current inflation rate figures?
To reduce inflation, interest rates need to be realistically raised to reduce spending on imported goods to keep the budget deficit down which is currently running at around £27 billion every three months. The only way in which this deficit can be financed is through further borrowing.

If interest rates rise too quickly, which they could well do if the BOE was fully allowed to do their job, up to 3 million current homeowners could well lose their homes by repossesion due to being over their heads in debt and unable to meet their mortgage repayments...are you really telling me there is NO political influence being applied here?
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No politcal pressure needed though. The BOE need and should consider homeowners and repossessions in what they decide with interest rate increases. After all that would then affect GDP and inflation......
 
There is no magic about fixed rate mortgages. The lender will buy or option money now at his fixed rate for the term and lend it to you at a higher rate. He may or may not leverage this money by re-lending it soon as money is paid back by you to provide additional mortgages, only paying back his principal at the end of the fixed term. All his early costs and interest is covered by the higher fixed mortgage arrangement fees. He carries little risk.
 
Greebo said:
No politcal pressure needed though. The BOE need and should consider homeowners and repossessions in what they decide with interest rate increases. After all that would then affect GDP and inflation......
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True.... but a totally independent BOE would also do what's best for the whole country and not just primarily for those who've strayed onto the bad investment road.
If interest isn't allowed to rise, then we'll see fewer jobs and probably increased unemployment due to lack of investment from overseas. Investors need to see a good return for their money or they simply won't invest in the country - low interest and high taxes are not conducive to the large scale investment this country needs.
 
dowie said:
Sorry but that is complete BS

Interest rates are set by the Bank of England these days - the reason for this is explicitly to avoid political interference. The current governor is the same one who served under the previous Labour govt - politics has got nothing to do with it.
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Nope, he's right. I believe politics has a lot to do with it.

lttlejoe said:
True.... but a totally independent BOE would also do what's best for the whole country and not just primarily for those who've strayed onto the bad investment road.
If interest isn't allowed to rise, then we'll see fewer jobs and probably increased unemployment due to lack of investment from overseas. Investors need to see a good return for their money or they simply won't invest in the country - low interest and high taxes are not conducive to the large scale investment this country needs.
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Indeed.
 
lttlejoe said:
True.... but a totally independent BOE would also do what's best for the whole country and not just primarily for those who've strayed onto the bad investment road.
If interest isn't allowed to rise, then we'll see fewer jobs and probably increased unemployment due to lack of investment from overseas. Investors need to see a good return for their money or they simply won't invest in the country - low interest and high taxes are not conducive to the large scale investment this country needs.
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Good point but they do need to consider the 3 million who have strayed onto the bad investment road as part of what's best for the whole country.

Having up to 3 million homes reposessed and millions of people homeless and the housing market collapse is not good for the economy or GDP. Of course inflation would drop like a stone and perhaps we would go into deflation which is equally not good.

So it's a balancing act as always. Interest rates need to increase but not by huge amounts to 10% like times gone by.

They will increase them slowly over next few years by a quarter of a point at a time and see what effect it has on the economy. Don'g forget higher interest rates means more cost for business which means increased prices of goods and hence inflation.....

High taxes only applies to the individual. Company taxation has never been so low and the low interest rates is a great boost to out business. In the last two years we have bought/financed over £2.5m of assets borrowing at 2.7%. We have created 12 new well paid full time jobs and turnover is up 43% and profits by 26%. Without the low taxation and interest rates, I doubt we would have acheived half of this.
 
In the past 10 years the interest base rate has hovered around 4-6% up until the crash, and historically that was viewed as being low as between 1970 and 2000 the base rate varied from between 5 and 15% or so with an average of about 10%.

I would have biten a bankers arm off for a 5% 10 year fixed (I'm on a 4.4% 5 year fixed for a 70% LTV!).
 
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