Mortgage Interest Rates

[Psycho Sonny]

Looks like I was right telling everyone to fix for 2 years. Slashed again.

Mine is due for renewal next year earlier I can switch without penalty is May 2021 as it was acquired in August 2016.

I'm currently paying 2.84% due to buying before they tanked last time around. 2 weeks before my move in date.

I think it is a 1% fine within the last year with nationwide.

I am being offered 1.14% to switch now.

How long do you think this rate will last? I bet you it lasts until April next year a month before my renewal.

Bloody typical.

 

[Psycho Sonny]

It's not an AIP, it's a full mortgage application (although I still havn't signed anything - just received the approval by email this morning so not got the paperwork yet). It's a 2 year fix at 1.43% so i'm happy with the rate anyway but it would be nice if I was able to get it a little lower. I won't actually be drawing down the funds for 12 weeks yet, so I'm not sure if there will be a chance to review the fixed term deal during this time?

You will need to submit a whole new application and get them to terminate the current one. After rates have adjusted.

I know this because rates changed 10 days before my purchase date. I was told whole new application. I didn't want to hold up the deal or cause it to collapse so I never bothered submitting a new application so late.

 

[Psycho Sonny]

You were right to telling everyone to fix yet had they been on a variable rate they would now see their mortgage costs drop.... so in fact you weren't right.

Apparently this is a temporary adjustment to the rate to help in the short term.

I was right in the fact that people were suggesting fixing for 5 or 10 years and I said fix for 2 max. As I couldn't see rates going higher because of brexit. Looks like corona virus was the cause however I was still right in terms of not going for a 5 or 10 year everyone else was telling people to go for. I said fix for the shortest possible deal and renew when it was done.

Trackers overall are far too risky for most people so 2 year fix is a much better proposition for most.

I will be going to a 2 year fix when mine is up

 

[Psycho Sonny]

I can do an early renewal soon (3-4 months), and if rates are still at current level I will be fixing for 5 years, maybe even 10 (so long as product is portable).
I cannot envisage them going lower, and if they do it will only be fractional so not much of a 'loss'. I would rather the stability of a low rate with option of overpayments for 5 years+ than the risk of rates going UP and me only having a short term on it.

But to each their own. We all have different circumstances and different appetite for risk.

You are right they can only go up and if they do go lower due to Brexit when that actually happens then I don't see them going negative. That wouldn't be good for anyone.

I might take a look at the 5 years and 10 years and look at the difference in payments.

My thinking is if I save X amount every month by going 2 instead of 5/10. I can overpay by that and more to get it down. Then I can also use the equity in future to potentially move up the ladder. Being locked in for 5 years or 10 years when you want to move and possibly free up some equity to do the place up would be a nice option to have on the table so I'd rather not fix long term.

My current house is actually fine I could do with a tiny bit bigger so I only envisage one such move in size. Other moves would be to better areas be the more likely option and much more expensive to the point I'd be putting all my eggs in 1 basket. That is the plan though as there seems to be more scum with money these days and infiltrating the half decent areas.

 

[Psycho Sonny]

Guess who fixed for ten years... On the plus side 2.94% is naff all for any sort of loan.

edit: 8 1/2 years to go with criminal early repayment fees before anyone asks

It's high though for a mortgage in this day and age. Mine is high at 2.84% as like I said I could get a re-mortgage today for 1.14%.

In terms of loans my past 3 loans have all been 3%. Bear in mind those are loans and not mortgages which are usually lower by some margin. So I would say it is high relatively speaking. The banks have you over a barrel though with the early repayment fees. I'm guessing by the tim yours comes to re-mortgage they will have likely risen. In terms of naff all you are likely going to end up paying what an extra £10K-£30K in interest at least over those 10 years? Depends on mortgage amount obviously but I'm assuming it's not below £100K.

I've learnt that flexibility is also an underrated option in this day and age. As have others who bought a house with someone then split up with them yet still have a fixed mortgage long term. 10 years is just too long IMO.

 

[Psycho Sonny]

Nah, the extra interest won’t be that much. Last time I looked it was about an extra £5.5k over 9 years. That will have increased given the current BoE rate. A pain in the rear but hardly a disaster.

extra £5.5K per year?

if over 9 years then i think you might want to use a MSE mortgage comparison calculator.

 

[Psycho Sonny]

Good prediction but I’m sure the reasons for it were much different. Edit Ah this thread isn’t very old

thing is it doesn’t really make a huge diff to most does it. I think the cut in total has saved about £50 for me

If I could switch now it would make a massive difference. I'm at 2.84% and when this new rate hits I'd be down to like 0.85%. A whole 2% off per year. which is thousands of pounds and tens of thousands over the term.

 

[Psycho Sonny]

Quoting myself...

Rates cut to 0.1% they will go negative by the years end at the latest.

Negative? You really think so? I know this is unprecedented times but it would be crazy if that happened. We are all in major trouble though. Peoples homes are about to lose millions off them.

 

[Psycho Sonny]

Why dont you then? whats the ERC ?

it would be 2% meaning I am at a net zero loss/gain switching now.

i'm better off just waiting it out. ERC's is always set up to make you lose and the lender win.

 

[Psycho Sonny]

So lenders starting to restrict, expected

https://www.bbc.co.uk/news/business-52106119

Never rely on remortgaging is always a piece of advice I give

25% equity shouldn't be an issue to anyone apart from first time buyers.

I was a first time buyer 3 years ago. I'm already at 50% equity.

If you don't have that amount of equity then you can't really afford the house would be my argument. You can on paper and are making the payments. However it's likely more than what you should have spent. I went for a 21 year mortgage too as a first time buyer. Sure I could have gone 35 year and bought bigger and better but being financially secure was a much better prospect. I've overpaid a lot sure on top of the lower term but still it shows you how much I could have went the other way and be stressed out if anything happened.

 

[Psycho Sonny]

Nonsense as ever, you seem completely out of touch with normal people in this regard.

Massive amounts of people can afford a mortgage, take one out and pay it off, over the original term, often 25 years.
On a 25 year mortgage this will often be 8 or so years in to get 25% if they went minimum deposit.
On top of that, most of the time owning with a mortgage is cheaper than renting. So people are better off buying a house than renting.
If renting was significantly cheaper than buying with a mortgage you may have a point, but its not, so you don't.

Your metric of affordability is miles off.

8 years is a 5 year fix had they already bought and some over payments on top

so not an issue for most sensible people.

 

[Psycho Sonny]

My NW rate has just dropped to 0.79% (tracker), it feels odd paying so little interest on the mortgage but a nice feeling. Nationwide have always seemed to have the best deal when I was approaching the end of my existing one so I've never actually needed to go with anyone else. As others have said above 'switching' from one NW product to another is super easy, takes about 5 minutes online and they even let me switch 3 months early on a fix once (all online, automated) which saved around £750 of interest due to the rate going down.

I just checked their website and with 40% LTV the best I can see is


1.54%

Base rate +1.44%

 

[Psycho Sonny]

Negative rates incoming.

Hopefully get a 1% mortgage within the next few months

 

[Psycho Sonny]

Says who?

https://www.theguardian.com/busines...bank-of-england-ftse-us-jobless-business-live

It's a likley scenario.

The rally is based on them being likley. So even the markets think it's going to happen.

 

[Psycho Sonny]

It’s the actual opposite. ‘Pound up as negative rates less likely’.

So they asked the banks of they would be ready if it were to happen for a laugh?

Nobody knows. That's how it works. We won't know what way they will go until it happens.

With all the job losses. House price increases. I can't see them being increased. It's a the likley scenario I can't see them going up.

 

[Psycho Sonny]

But the people who set rates have said negative rates are less likely ?

didn’t you think rates were only going up so fixed ?

I’m on 0.79% so don’t mind another cut

No my deal is nearly ending i can apply for a new deal on the first of April.

I need them to either go down before then or if they do go up I hope they go up after I've got my new deal sorted.

So the sooner the better.

 

[Psycho Sonny]

Santander 60% LTV is 1.41% 5yr fixed at the minute.

Looking at that myself. Think I'm going to port my mortgage to a new property and take out a new mortgage to run alongside it.

Nationwide is 1.39%

 

[Psycho Sonny]

If you only have an offer that means no fees have been paid, by the buyer.

For the sake of 5 months and 8k,is it worth either refusing the offer or withdrawing from selling?

Depends if you can afford it or think prices are going up or down.

It's not free to sell a home.

He's had to list it. Pay fees and possibly lawyers.

Is it worth pulling out now and have wasted everyone's time and money?

It won't be £8k when you take into account all of the above.

 

[Psycho Sonny]

As usual you haven't read the post and made your reply about what you THINK you read.

I said no fees have been paid by the buyer, NOT by the seller. Therefore the seller will have paid fees.

I would feel bad if I pulled out and the buyer had paid for surveys etc, but the sale does not seem to have reached that point.

So up to the seller if they want to lose the estate agent fees to save the £8k fee.

You haven't read my post.

He's not going to be saving £8k at all.lts going to be far less.

He's paid fees to list it and spent money and time doing so. Those fees will need to be paid again when he relists in 6 months time.

If he doesn't sell he then has to pay for the mortgage and it's interest until it does sell in future.

Let's say the market crashes in 3 months and now his flat is worth £10k less. It's likely that could happen with Covid and job losses and the economy tanking.

He then has to re list and spend time and money selling all whilst paying the mortgage on a flat that's now much harder to sell with what could happen several months down the line. Furlough won't last forever.

He then ends up losing £10k in equity, £3k in fees and then another £5k in interest as he kept waiting for a better offer.

He should look at it as getting rid of a property he doesn't want rather than losing £8k as £8k isn't the full cost of backing out.

 

[Psycho Sonny]

Chancellor just announced huge growth this year and exponential growth next year but then falling back to normal.

So I can remortgage on the first of April. Do I go 2 year fix or 5 years?

Will rates be going down to help this growth? That's the only way I can see massive spending happening is if borrowing is made to become even lower.

Negative interest rates? Should I go with a tracker then?