Ditching my ISA
- Thread starter Mr-White
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Soldato
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Its really hard to say. The BOE has indicated that the base rate will be some time off yet, late next year probably around the earliest.
However until funding for lending kicked in, savers rates were well above base rate and rising due to the short supply being competed for.
E.g I got 3.3% on a cash ISA 2 years ago, base rate had been 0.5% for ages then, but year before I got 3% ISA and year before that 2.8% ISA.
How or if there will be supply issue again is questionable. If current demand for housing keeps going up, it is forseeable a savers rate increase could start to kick in and this feeds obviously to the cost to borrow.
As I said before though I don't see the government/BOE allowing any big changes as too many people are on the edge, so I would expect them to step in again if borrowing capital dried up and/or rates started to rise excessively.
My gut feel is we will be back to a base rate of 3% or so in about 2-3 years.
Mortgage rates will probably rise about 2% maybe a little less as they are actually probably further above the base rate than normal at the moment (gap between base rate and typical mortgage rate)
The more steam in the recovery the more likelyhood of rates rising. Low rates actually supress some sectors of the economy such as people with low income but some savings eg reasonably well off pensioners. If they see inpact on rates which is in effect their income they tend to stop spending that bit extra. Low rate also affect some investment vehicles such as bonds which affects pensions.
Low rates have in effect been getting the financially prudent to bail out the financially imprudent.
Soldato
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Personally I would if I could get a good rate on a decent term fix.
Short term fixes are not really worth doing but a good medium/long term one makes a lot of sense.
Weigh up trackers etc, but generally normal mortgage rates are trackers just without specific conditions. Eg if base rate is 5% standard mortgage may be 8%, if base rate moved to 6%, standard will almost definately move to around 9% (thats tracking
)The risks with longer term fixed are really
- Interest rates drop, do you mind "overpaying" in that scenario (your accepting some risk of overpaying for the opposite chance of underpaying)
- Are you likely to need to pay off the mortgage for some reason, they come with penalties for early repayment
- Is it transferable (so if your forced to move house do you keep the same deal)
- Your mortgage payment coverage %. If your mortgage is going to be 50% of your take home you probably want more certainty on payments than someone whos mortgage % is 25%.
Our mortgage is probably 25% of our income. We will probably look to move and then get a buy to let mortgage on the flat. Likelihood 2 years time or so.
I appreciate interest rates can still drop but if they are fairly low at the moment then they aren't likely to drop massively. I would prefer to pay a fixed amount every month so I can keep track of my spending.
I appreciate interest rates can still drop but if they are fairly low at the moment then they aren't likely to drop massively. I would prefer to pay a fixed amount every month so I can keep track of my spending.
Associate
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Associate
- Joined
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- Edinburgh
Lifetime base rate trackers are good deals if you can get one at a decent level.
There's a couple around that are 1.5-2% above base rate. Even when interest rates rise, these are going to be competitive, especially when you take into account the cost of mortgage arrangement fees which most products involve nowadays.
People who fix on "good" deals often fail to factor in the £500-£2000+ arrangement fee that just got lumped onto their mortgage and even in some cases redemption fees which they'll have to pay to change provider once the fix ends.
There's a couple around that are 1.5-2% above base rate. Even when interest rates rise, these are going to be competitive, especially when you take into account the cost of mortgage arrangement fees which most products involve nowadays.
People who fix on "good" deals often fail to factor in the £500-£2000+ arrangement fee that just got lumped onto their mortgage and even in some cases redemption fees which they'll have to pay to change provider once the fix ends.
Sorry for the late reply - I haven't logged on for a few days.
It is far simpler than it used to be. Back in the day you were encouraged to define your risk appetite (i.e. choose the quality of borrowers). That's still there but it is instead becoming homogenized into a collective level.
Three years on, still waiting.
3% is fantastic by today's standards
Something very hard to come by though?
I see most Banks are at sub 1% now, and that will be AER. By gosh they sure are doing us a favour there!
You're allowed as many ISAs as you want so long as you don't put away so much as to break your yearly allowance and you only pay into one each year.
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