Sith Happens Posted September 15, 2017 Share Posted September 15, 2017 I know we have been stuck on low rates for along time now, but talk always seems to be they will rise soon. My mortgage deal is coming up for renewal soon, and wondering what to do. The cheapest option is a tracker, but im wary of this if rates increase. I can actually do a 5 year deal for a few quid extra a month. Any experts out there that have a gut feeling for what will happen? I know we have some clever people in here who know about finance. Its knowing what to do, last time i did it for 2 years but I am one for security rather than going for absolute cheapest option. Any thoughts? Link to comment Share on other sites More sharing options...
King Kevin Posted September 15, 2017 Share Posted September 15, 2017 5 year fixed is where I would go ,some great rates around and I suspect they will look even better in a few years time .Question you need to ask yourself is can I afford the repayments on say a medium term fixed deal and then opt for this for the peace of mind ,or do I want the very cheapest deal but are prepared for increased payments etc. It's certainty over the unknown and interest rates will only go one way from an historic low ,in fact the BOE issued a warning of rate rise yesterday. Link to comment Share on other sites More sharing options...
Stive Pesley Posted September 15, 2017 Share Posted September 15, 2017 To be fair they have been warning of rate rises for years now. Hardly surprising when it's been static and so low for so long, but in that time I've seen the banks really try and stiff people over the uncertainty by offering fixed deals that are extremely crap if the rates never rise What you really need to do is some hard sums on how much interest rates would have to rise in order to make the tracker more expensive than the fixed rate you are tempted by. And then bear in mind that any interest rate rises are not going to be dramatic, it will most likely be quarter of a point at a time and then a few months to see the impact before they make any further changes. Unless there is some kind of unprecedented economic happening they aren't going to increase by multiple percents in a short space of time, as that would cripple far too many people. If people can't afford their mortgage then they will stop spending. If people stop spending then the economy is in (even bigger) trouble. Unless you have a gigantic mortgage a quarter of a percent rise is not going to make a deal of difference to your monthly payment Link to comment Share on other sites More sharing options...
therealhantsram Posted September 15, 2017 Share Posted September 15, 2017 I would go fixed at the moment unless you feel you have enough disposable income that you would be fine if Base rates rose to say 3pc.my view is that brexit takes the enonomy to a place it has never been before and so impossible to predict the impact. Link to comment Share on other sites More sharing options...
Stive Pesley Posted September 15, 2017 Share Posted September 15, 2017 Feel free to share some figures on percentages and length of term if you want some sanity checking. It's not as simple as saying fxed or variable- the devil is in the detail, Link to comment Share on other sites More sharing options...
Gritstone Ram Posted September 15, 2017 Share Posted September 15, 2017 My advice would be to take out the lowest fixed rate you can get and make extra payments with the money you are saving on a five year fixed rate. In fact try to pay off as much capital as possible then if the rates do go up you aren't paying interest on as much money. Link to comment Share on other sites More sharing options...
Stive Pesley Posted September 15, 2017 Share Posted September 15, 2017 20 minutes ago, Gritters said: My advice would be to take out the lowest fixed rate you can get and make extra payments with the money you are saving on a five year fixed rate. In fact try to pay off as much capital as possible then if the rates do go up you aren't paying interest on as much money. Not a bad idea, but first check you have a mortgage product that allows overpayments free of charge - not all do. Some rob dog banks charge you for the privelige of paying MORE than you are contracted to... Link to comment Share on other sites More sharing options...
King Kevin Posted September 15, 2017 Share Posted September 15, 2017 3 hours ago, therealhantsram said: I would go fixed at the moment unless you feel you have enough disposable income that you would be fine if Base rates rose to say 3pc.my view is that brexit takes the enonomy to a place it has never been before and so impossible to predict the impact. The economy has been out of the EU far longer than it's been in it . Link to comment Share on other sites More sharing options...
Wolfie Posted September 18, 2017 Share Posted September 18, 2017 On 15/09/2017 at 08:17, Paul71 said: I know we have been stuck on low rates for along time now, but talk always seems to be they will rise soon. My mortgage deal is coming up for renewal soon, and wondering what to do. The cheapest option is a tracker, but im wary of this if rates increase. I can actually do a 5 year deal for a few quid extra a month. Any experts out there that have a gut feeling for what will happen? I know we have some clever people in here who know about finance. Its knowing what to do, last time i did it for 2 years but I am one for security rather than going for absolute cheapest option. Any thoughts? Our mortgage deal is up for renewal next month & my instinct this time is to maybe fix for 5 years. Now the little one has started school & we're not paying nursery fees any more, we're about £300 a month better off, so I also want to use the cash to bring the term in by a few years, We've got a visit from the mortgage advisor tomorrow evening so I'll feed back what advice she gives us. Link to comment Share on other sites More sharing options...
RiddingsRam Posted September 18, 2017 Share Posted September 18, 2017 1 hour ago, Wolfie said: Our mortgage deal is up for renewal next month & my instinct this time is to maybe fix for 5 years. Now the little one has started school & we're not paying nursery fees any more, we're about £300 a month better off, so I also want to use the cash to bring the term in by a few years, We've got a visit from the mortgage advisor tomorrow evening so I'll feed back what advice she gives us. I've just renewed my deal , fixed for 3 years , lowered my monthly payments by £40 and got 11 years off the mortgage. Happy days ? Link to comment Share on other sites More sharing options...
King Kevin Posted September 18, 2017 Share Posted September 18, 2017 What's a mortgage . Link to comment Share on other sites More sharing options...
Stive Pesley Posted September 18, 2017 Share Posted September 18, 2017 1 hour ago, King Kevin said: What's a mortgage . Yeah it’s annoying – bought my first house in 1995 for £35k. If I’d stayed there I’d have a couple of years left on the mortgage and it would have been a grand or so left. Enough for me to have paid it off comfortably much earlier than 25 years. As it stands, I moved to a slightly bigger house in 2006 and the net result was an added £80k to the loan. Still owe about £55k Link to comment Share on other sites More sharing options...
King Kevin Posted September 18, 2017 Share Posted September 18, 2017 On a serious note it's my industry please don't pay a fee to a broker, if anyone from DCFC fans wants any advice please pm me and I will make sure you get fee free advice .Obviously affiliated so if against forum ruled please delete mods. Link to comment Share on other sites More sharing options...
Stive Pesley Posted September 18, 2017 Share Posted September 18, 2017 34 minutes ago, King Kevin said: On a serious note it's my industry please don't pay a fee to a broker, if anyone from DCFC fans wants any advice please pm me and I will make sure you get fee free advice .Obviously affiliated so if against forum ruled please delete mods. Don't need mortgage advice but if anyone could offer me the same regarding pensions that'd be pretty good right now! Link to comment Share on other sites More sharing options...
SillyBilly Posted September 18, 2017 Share Posted September 18, 2017 Lots of talk of preparing for a "reflation" cycle as we end a period of almost 40 years of consistently falling inflation and interest rates. Ordinarily I'd have put the house on a deflationary bust and then reflation (i.e get a 5 year fix on expectation that rates will rapidly increase) but the rules have changed. I'm personally betting on the Japanese model which I see as the only example to follow (although am in a minority I think), massive and repeated fiscal stimulus to maintain a perpetually stagnant economy with sustained low or zero interest rates. Almost indefinetly providing a downturn is met with more QE. Thus it'd be a 2 year fix at lowest possible rate and remortgage for me. May get a token rise to 0.5% again but I can honestly see the Fed tightening into a recession now and having to reverse when they should have done this in 2012. Be brave for BoE to ignore that. Btw if rates do move they will move quick, not planned step changes. Interest rates don't move up steadily and go down steadily, central banks just react like the rest of the market does. We will be blindsided as always. Link to comment Share on other sites More sharing options...
ketteringram Posted September 18, 2017 Share Posted September 18, 2017 33 minutes ago, SillyBilly said: Lots of talk of preparing for a "reflation" cycle as we end a period of almost 40 years of consistently falling inflation and interest rates. Ordinarily I'd have put the house on a deflationary bust and then reflation (i.e get a 5 year fix on expectation that rates will rapidly increase) but the rules have changed. I'm personally betting on the Japanese model which I see as the only example to follow (although am in a minority I think), massive and repeated fiscal stimulus to maintain a perpetually stagnant economy with sustained low or zero interest rates. Almost indefinetly providing a downturn is met with more QE. Thus it'd be a 2 year fix at lowest possible rate and remortgage for me. May get a token rise to 0.5% again but I can honestly see the Fed tightening into a recession now and having to reverse when they should have done this in 2012. Be brave for BoE to ignore that. Btw if rates do move they will move quick, not planned step changes. Interest rates don't move up steadily and go down steadily, central banks just react like the rest of the market does. We will be blindsided as always. That last paragraph....... Ten years ago, I'd have completely agreed with you. Now I just don't know. Not saying you're wrong. I just don't know anymore! Link to comment Share on other sites More sharing options...
Stive Pesley Posted September 19, 2017 Share Posted September 19, 2017 14 hours ago, ketteringram said: That last paragraph....... Ten years ago, I'd have completely agreed with you. Now I just don't know. Not saying you're wrong. I just don't know anymore! Carney's quote from yesterday contradicted that. He basically said if interest rates do rise it will be small and slow Link to comment Share on other sites More sharing options...
Wolfie Posted September 19, 2017 Share Posted September 19, 2017 3 minutes ago, StivePesley said: Carney's quote from yesterday contradicted that. He basically said if interest rates do rise it will be small and slow Agreed. Theres just no sign of the UK economy being able to tolerate quick & large changes in interest rates. The only driver for increasing rates is inflation due to increased import prices. Raising interest rates will help increase the value of Sterling a bit but the benefit of that on import prices is most likely to be massivley offset by the negative effects of choking off consumer demand as we all have to pay more for the huge debts we've accrued in recent years. It would also increase the uncertainty in the economy at exactly the wrong time. Until Brexit is sorted - one way or another - I just can't see rates going any higher than 0.5%. Link to comment Share on other sites More sharing options...
SillyBilly Posted September 19, 2017 Share Posted September 19, 2017 7 hours ago, Wolfie said: Agreed. Theres just no sign of the UK economy being able to tolerate quick & large changes in interest rates. The only driver for increasing rates is inflation due to increased import prices. Raising interest rates will help increase the value of Sterling a bit but the benefit of that on import prices is most likely to be massivley offset by the negative effects of choking off consumer demand as we all have to pay more for the huge debts we've accrued in recent years. It would also increase the uncertainty in the economy at exactly the wrong time. Until Brexit is sorted - one way or another - I just can't see rates going any higher than 0.5%. Aye. Central banks have 2 (sometimes conflicting) objectives - to maintain market confidence in the currency of the country and to set the price of money according to the need of the economy. Except short and long term need is completely different here and herein is partly the reason we can never leave this stagnant economy behind while we maintain low rates, a clear refusal to admit the money can't be repaid. The real driver for increasing rates should be to prevent explosions of credit (which we have) and the resulting overheated markets. The fallback of those markets (including housing and now automotove loans) will harm the country far more than sterling movements IMO, short of a run on the pound. Pushing down rates to 0 has had the effect of pushing down return on debt to almost 0 or negative in a lot of cases. Cheap money leads to poor allocation of capital. The need to increase rates is real and serious for both the medium and long term good of the economy and ultimately all of us working in it. We agree central banks won't do it hence why I don't think we will get a gradual anything. Either continue as we are or a violent shock up by a black swan market event...something no-one sees coming. Link to comment Share on other sites More sharing options...
Wolfie Posted September 21, 2017 Share Posted September 21, 2017 Visit from the mortgage lady the other night. Went with Santander, fixed 5 years. I'm told they've got some very competitive rates & we bank with them, so makes it easier. Our aim was to use the extra cash just freed up by not having to pay nursery fees any more to bring in the term by a few years. I'd calculated I could probably just about knock 5 years off (with the quick online quote I'd got from Santander) but with the better deals she was able to access, we've managed to take 6 years off and still be about £100 better off per month. Very happy with that & if anyone wants contact details of the advisor, then I'm happy to recommend. PM me if so. Link to comment Share on other sites More sharing options...
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