Mortgage Rate Rises

platinum87 said:
You want a tracker in the hopes interest rates will go down, but how much can they exactly go down, and the answer is very little, while they can go up a lot more.

I consider that trading/speculation, not purchasing a home to live in scenario.

I googled quickly and found a 4% fixed for 25 years, with a 1% repayment penalty, i think the penalty is only for the first 3 years, either way, i consider that to be great

If things get worse, then interest rates go up higher, your house valuation will be lower due to this, in that scenario, your happy as your fix is far below

If things get better, interest rates go down, its not entirely bad, house valuation will not go down ultimately you can re-mortgage at that point and go on a new fixed term which is better.
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Iv always said to people recently the mortgage rates are likely to go down possibly the same pace fuel costs spiked then start gradually going down. Or maybe slower, who knows! They do like dragging it out, the longer they drag it out the more money they make.

I wouldn't want to fix at 4% on 25 years if there is going to be a decline.

What would annoy me is fixing at 4% then a week later they drop the rates to 3.5 then two weeks later 3 then two weeks later 2.5% that would annoy me but very unlikely

If there is a gaurenteed decline i would like the option to fix at a low , which is one reason I was looking at a tracker. But on the other hand something could stir up later this year or next and rates start climbing again.

I would fix at 2 years but the bloody lenders have made this their expensive product.. not like 5 years ago where it was more expensive to fix at 5 .

Gaurentee which ever I choose it will end up being the wrong one :D
 
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DJMK4 said:
I would fix at 2 years but the bloody lenders have made this their expensive product.. not like 5 years ago where it was more expensive to fix at 5 .
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but that does give you a good indication of where things are expected to go and likely will.

3/4/5 years ago, they expected interest rates to rise in about 5 years, so didn't want to offer a package for that length and get caught out at the end where they've offered too low a rate and interest rates have jumped up.

right now they expect interest rates to be lower in 5 years so will happily offer a lower price now knowing during the term interest rates come down.
 
Submitted info to L&C mortgage brokers yesterday, had an initial chat with them this morning on the phone, lets see what they come back with!
 
Regarding interest rate changes in general I called it well in the past, I fixed short term in 2006 when they were on the way up, then switched to a lifetime tracker early 2008 following the run on Northern Rock as expected rates to be falling.
However say ~8 years ago when you could get 10 year fixes at 2.49% with no fees I would have very much been in favour of taking those out, but the reality was it's only towards the end of that term that rates have risen, you could have saved money by getting a lower rate on a shorter term fix. 12 years ago I fully expected rates to have hit 4% long before now.
That said the recent hikes were obvious with huge inflation and sterling plummeting. A simple rule of thumb I've found effective is to just look at inflation and exchange rates as a barometer for what's likely to happen with interest rates. The key thing with inflation is what happens this year i.e. will the big rises as a result of energy prices 'decay' as they roll off the annual pricing indicies and see it returning to more normal levels or will it remain high. If it remains high and Sterling remains below 1.3 USD I wouldn't rule out the possibility of further rate rises.
 
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HangTime said:
Regarding interest rate changes in general I called it well in the past, I fixed short term in 2006 when they were on the way up, then switched to a lifetime tracker early 2008 following the run on Northern Rock as expected rates to be falling.
However say ~8 years ago when you could get 10 year fixes at 2.49% with no fees I would have very much been in favour of taking those out, but the reality was it's only towards the end of that term that rates have risen, you could have saved money by getting a lower rate on a shorter term fix. 12 years ago I fully expected rates to have hit 4% long before now.
That said the recent hikes were obvious with huge inflation and sterling plummeting. A simple rule of thumb I've found effective is to just look at inflation and exchange rates as a barometer for what's likely to happen with interest rates. The key thing with inflation is what happens this year i.e. will the big rises as a result of energy prices 'decay' as they roll off the annual pricing indicies and see it returning to more normal levels or will it remain high. If it remains high and Sterling remains below 1.3 USD I wouldn't rule out the possibility of further rate rises.
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The high inflation right now is mainly driven by two things, energy and housing. Its pretty inevitable energy will partly fall out (price cap going up with however hamper that).
Housing will see a long tail as many coming off very cheap deals for upto 4 years yet. If rates drop that will lower but unlikely to be non inflationary. Rents have gone up and likely will more due to general inflation, continued supply/demand and some LLs position in regards interest.

However wage rises (not super inflationary in general) and food prices are going to factor in more than they have up until now. Many people are only just asking for the first real inflationary rise since the start of the crisis.
 
200sols said:
Thing is, if your earlier fix came to an end around now you'd be in a similar situation to the many people you like to deride and laugh at for not looking ahead. For most people it is a question of luck, not timing.
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i wasn't on an earlier fix there was no need ..
 
dLockers said:
10 years of low interest rates and all of sudden we have several experts who called it (lol)
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What drives me crazy is people saying "these stupid first time buyers who have over extended back in my day... I knew rates would go up"

When for the past decade rates have been so low and its been the best move to max out your mortgage size to get best house you can.
 
flea.rider said:
to true ...ohh thats right i got a 10yr fixed 3 yrs ago ..you had to of seen it could not last
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If you'd known all that and what was going to happen you would have fixed for 2yrs at that point and then for 10yrs by March 2022 since that was all still possible to maximise the lowest rate for longest period. With that noted if you mean that yeah at some point you know they would go up again, well yeah, everyone realised they couldn't last forever at the low rate but it was knowing when that would happen and what would trigger it.
413x said:
What drives me crazy is people saying "these stupid first time buyers who have over extended back in my day... I knew rates would go up"

When for the past decade rates have been so low and its been the best move to max out your mortgage size to get best house you can.
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Excatly and for a lot of first time buyers to even get on the property ladder they actually just generally have to basically max their mortgage ability to even secure a property rather than people generally just buying beyond their limit.
 
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