Current mortgage situation question

[Rotty]

I dont get why people say houses are still over-priced.... Houses are only over-priced if no one buys them as people pay for things what they think it is worth, ergo if a hose sells it is not over-priced.

very true, the market is improving and prices rising so the public think that there is value out there

 

[HangTime]

1. a tracker would be more affordable

2. if you are cutting it that fine that you need this "piece of mind" then you have over stretched yourself

3. a "no tie in" tracker offers more flexibility

Plus 1&2 are interrelated somewhat... because a tracker is cheaper, it means you have more money set aside for 'piece of mind' anyway (i.e. a buffer for when rates increase).

That said one thing to bear in mind is that unless you monitor the market very closely, having a "no tie in" won't help a lot if interest rates go up, because the alternative (fixed) products you might consider moving to will be rising as well. Obviously with mortgages tending to get sold in 'batches' people with their finger on the pulse may be able to jump ship at the right time, but for your average joe who gets a mortgage and then maybe looks at every couple of years this is something they need to be aware of.

One of the most staggering things in the mortgage market right now is the huge discrepancy between base rate and lender rates. A few years ago, getting a product within 1% of BR was a doddle, and indeed products with fees would even be below base rate at times. Nowadays we have a situation where fixed rate mortgages aren't that much different in rate from 3-4 years ago, even though the base rate is 4-5% lower.

 

[scorza]

current fixed rates are horrible and with no imminent sign of huge rate rises make no sense at the moment

I'm not so confident about that - what with rising inflation and Britain's credit rating under threat. I'm not confident at all that interest rates will stay as low as they are for the year, hence why I just re-mortgaged on a 5 year fixed rate.

The thing is, as far as I can tell, tracker rates are just as horrible as fixed rates. When I bought my house in '07 the tracker rates on offer were all for example BoE base rate - 0.25%, these days they seem to be more like BoE base rate +2.5%

Not that I can predict the future any better than anyone else, but I just don't like the risk of tracker mortgages, and I'm quite happy to pay a bit extra for a bit of certainty.

 

[Rotty]

I am not saying they will stay at 0.5% but they would need to rise 2-3% before a fixed would have been a better deal with me, as any increase of this amount would kill any recovery it is very unlikely to happen

 

[HangTime]

I agree, I have a fully portable lifetime tracker myself at +0.59% and don't think I will ever change it because of the large premium on fixed products (see edit above). I even got ambushed in the bank the other month by someone wanting us to move to some great new fixed product, I said look across the 2 year fixed period you are offering, BoE would need to increase rates by like 5% within the next year for me to save any money, even before taking fees into account!

I think it's important to make people aware though that jumping off a tracker onto a fixed product at the current rates isn't something to take for granted though when selling the flexibility angle.

 

[Rotty]

I had a lifetime +0.14% tracker on a second property unfortunately I sold it recently and the mortgage was not transferrable

 

[Raumarik]

1. a tracker would be more affordable

2. if you are cutting it that fine that you need this "piece of mind" then you have over stretched yourself

3. a "no tie in" tracker offers more flexibility

That's all well and good Rotty but at the moment a lot of people can't get tracker mortgages so the argument for them is a tad pointless. I'd argue they're still better with a fixed rate than renting somewhere until the country is sorted out, which could be a decade at this rate.

 

[Rotty]

That's all well and good Rotty but at the moment a lot of people can't get tracker mortgages so the argument for them is a tad pointless. I'd argue they're still better with a fixed rate than renting somewhere until the country is sorted out, which could be a decade at this rate.

I can agree with that, I wasn't aware that fixed rates were easier to get that trackers

 

[stoofa]

I got 2.74% (+2.24 tracker) , no tie in, lifetime

this was a few weeks ago from HSBC

Phew - luckily no tie-in.
Cause once those interest rates start to rise and rise, trackers aren't going to be so great.

I finished my last fixed term about a year ago.
Right now I'm just paying my Building society's basic rate of 4% - and will probably continue to do so for a little while yet.
Once I spy interest rates going back up I'll lock myself in long term for as low fixed rate as possible.

 

[Rotty]

by the time base rates start to rise the tracker margins should have reduced from the current silly rates

 

[goldilocks]

2. if you are cutting it that fine that you need this "piece of mind" then you have over stretched yourself

how is this true?
if you could not afford your mortgage if it rose by 5% (which isn't beyond he realms of imagination) that isn't by any means 'cutting it fine' - it's sensible financial planning.
there is a difference between over stretching yourself, and realising that you WOULD be overstretched if the base rates increased dramatically for any reason, especially give the seemingly still unsteady global financial situation, and the huge number of things that could influence the bank of england base rate.

i'm no financial advisor, but i know the difference between 'over stretching' and 'being on the safest side'

(edit: considering fixed term trackers vs fixed term fixed rate - no-tie-in trackers often aren't available for ftbs, etc)