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Mortgage Interest Rates

Discussion in 'Home and Garden' started by Psycho Sonny, 11 Mar 2020.

  1. Buffman

    Sgarrista

    Joined: 4 May 2007

    Posts: 7,893

    Location: West Midlands

    Most trackers will stop at 0% also I.e. Wont consider a negative interest rate if there was one.

    The main advantage is additional flexibility to overpay or pay it off/move house easily.
     
  2. Simon

    Capodecina

    Joined: 21 Oct 2002

    Posts: 23,929

    Location: Berks / Moscow

    So in a few years you can claim you 'saw it coming' ? :D. Like your previous 'the sage of interest rates' posts?
     
  3. Simon

    Capodecina

    Joined: 21 Oct 2002

    Posts: 23,929

    Location: Berks / Moscow

    Same and got to pay to move to a crapper rate in May :(
     
  4. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,955

    I'm going to either free up equity and go with a 5 year fix or alternatively not free up anything and a 2 year fix.

    Reason being freeing up the equity I'll be more exposed to changes in interest rates so better off with security.

    I don't see a big advantage with a tracker.

    Reason for going 2 years would be to just build up equity to move in 2 years time.

    Alternatively if I free up the equity it will be to do originally I was thinking 3 large projects I'm now upping that to 5 by adding a wrap around extension onto just an extension and garage conversion. And adding on a cheap attic conversion to full insulation and storage only, won't be used for living purposes just house a server and boxes, it equipment, etc and build storage and fully floor it properly so that it can hold more and be more organised.

    Then log cabin for home gym or home office purpose and then double the current shed and get rid of the lawn mower as I'll removing all the grass and use the new shed as a cocktail bar with a open up hatch, etc.

    I was speculating to see what others thoughts were. Personally I now don't see them going any lower. It was all just a rouze telling the banks to prepare for negative rates to boost confidence. I don't see it happening at all now.

    So personally I would be recommending everyone to go for long fixes if you are staying put. Majority seem to be thinking the opposite so I'll bet long this time.
     
  5. Maccy

    Commissario

    Joined: 23 Nov 2004

    Posts: 37,816

    Location: Herts

    I don't understand this, surely at the mo a tracker is going to be less interest than any fix?
     
  6. Bug One

    Capodecina

    Joined: 18 Oct 2002

    Posts: 10,716

    Location: Sandwich, Kent

    Nope.

    2 yr Fixed

    1.29%

    £999
    3.3% APRC


    2 yr Tracker

    1.39%

    Base rate +1.29%

    £999
    3.3% APRC
     
  7. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,955

    Nope. Only for folk that took out trackers ages ago and have subsequently enjoyed interest rates moving down to where they are now.

    If you try and get a tracker now it's more expensive than fixing.

    Just do a quick 30 second rates query with your current provider for confirmation. Does make you think how the people who took these trackers several years back, what was their thinking behind it?

    My bank it's a 0.2% difference so I would need the base rate which is currently 0.1% to go to minus 0.1% to break even but it would be a loss up until that happens. It would realistically have to go to minus 0.4% minimum to make it a worthwhile gamble.

    I just can't see that happening and if it does it will surely make the markets go mental in terms of pensions, investments, commodities.

    Going to go with a fix. Tracker just not worth the risk at the moment unless you know for a fact rates will be going negative and by a large amount for sure.

    I can see them trying 0% first to see what that does before going negative.

    I'm tempted by the 2 year for this reason to see where the land lies in 2 years. But then I'm thinking now is the probably going to be the time fixing long makes the most sense.
     
  8. Maccy

    Commissario

    Joined: 23 Nov 2004

    Posts: 37,816

    Location: Herts

    Ah I see what you mean now.
     
  9. Simon

    Capodecina

    Joined: 21 Oct 2002

    Posts: 23,929

    Location: Berks / Moscow

    Worth considering that a Tracker has the benefit of no ERC versus a fixed if you plan to move
     
  10. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,955

    Not always it depends on the lender.

    A lot of trackers now carry early repayment charges.

    Yes I know it's very cheeky of the crafty buggers. Always read the full terms and conditions. Your lender may not but a lot do.
     
  11. Simon

    Capodecina

    Joined: 21 Oct 2002

    Posts: 23,929

    Location: Berks / Moscow

    ok, on exact comparisons where there is a 0.1% difference its usually the case. not always
     
  12. Jimbo Mahoney

    Soldato

    Joined: 18 Oct 2002

    Posts: 6,374

    I'll just leave this here...

    [​IMG]

    I would fix for as long as possible, at least if you don't think you're going to want to move within that timeframe (although I think you can move a fixed rate mortgage, but not had to worry about that yet).

    If/when interest rates go up (and I'm not saying they will soon), I will overpay. Whilst I'm getting more return on my investments, the mortgage company can just take the minimum capital + interest repayments.
     
  13. dLockers

    Mobster

    Joined: 21 Jan 2010

    Posts: 2,983

    You can move within a fixed but the fee is significant.
     
  14. Psycho Sonny

    Caporegime

    Joined: 21 Jun 2006

    Posts: 35,955

    I get your point however it's very cheeky for that graph to stop at 2003.

    At least could have included 2010 and 2017.
     
  15. Peerzy

    Soldato

    Joined: 9 Nov 2008

    Posts: 6,856

    It always amazes me that people umm and ahh about an extra £5 a month than a tracker may cost at the moment. Go and look in the 'waiting to exchange' thread and count the number of people who say:

    We fixed for 5 years as weren't planning on moving but baby on the way / job has changed / need a bigger house / moving away / promotion / getting divorced / made redundant / any one of about 10,000 different life reasons and the bank have quoted £X thousand to exit our deal, I think we'll just have to pay it.

    Tracker has always been cheaper for me, I understand at the moment it's ever so slightly more expensive but they normally allow unlimited overpayments and complete flexibility with moving.
     
  16. b0rn2sk8

    Soldato

    Joined: 9 Mar 2003

    Posts: 7,494

    No. You can move in the fixed period without paying any fees, you just can't shop around for a mortgage. Almost all lenders will port the existing mortgage and rate to the new property assuming you still meet their lending criteria (which you should unless something changes drastically). You just need to take additional lending on any gap at what ever rate they offer at the time. It's really not that restrictive at all.
     
  17. dLockers

    Mobster

    Joined: 21 Jan 2010

    Posts: 2,983

    The 'fee' may be wrapped up in less favourable rates, an ERC, a porting fee - it is still a significant cost to pay if you are buying up, or down. Take your point though.
     
  18. b0rn2sk8

    Soldato

    Joined: 9 Mar 2003

    Posts: 7,494

    What do you mean a porting fee? I ported my mortgage in 2019, I got the same rate as they would offer any other customer in my LTV bracket and the lender was just as competitive in the open market as it was when I got the original mortgage (e.g. it was one of the cheapest out there). I didn't need to pay any ERC or additional fees.

    Porting is simple, commonplace and fee free. The only 'lottery' is if you still meet the lending criteria for the amount you want to borrow and if that lender is still competitive. The former shouldn't be an issue unless you have suddenly become self employed or borrowing beyond your means and the latter is a roll of the dice but most are generally in the ball park. You can always switch the whole mortgage to another lender at the end of the fixed period for the first mortgage if you put the new lending on a tracker or fix it for the same/shorter period.
     
  19. dLockers

    Mobster

    Joined: 21 Jan 2010

    Posts: 2,983

    Interesting - good to know. I guess my eyes have been drawn to the ERC part of my T&Cs! (Don't let my wife know)
     
  20. Jimbo Mahoney

    Soldato

    Joined: 18 Oct 2002

    Posts: 6,374

    Agreed. Wiki has a nicer one:

    [​IMG]