Laird Lugton Posted July 25, 2012 Report Share Posted July 25, 2012 So my fixed rate deal is coming to an end at 4.77% and I'm wondering about going fixed again or onto a tracker. The wife and I have always gone fixed as we're cautious souls, however over the last couple of years we could have done much better on a tracker rate (if there are two queues we can pick the slowest ) So we're pondering whether or not to go for a tracker, however the eurozone is a concern, as is the UK triple A rating (according to a colleague). What do any of the wise people on here think? I know there are some savvy financial types on here, what are your thoughts? For the record we have an offset mortgage and the mortgage debt will equal our savings in about 4 years. Quote Link to comment Share on other sites More sharing options...
KPV4 Posted July 25, 2012 Report Share Posted July 25, 2012 To be honest I'm in the same boat as you, my fixed rate finished last September, so I have been on the base rate + since. I've been wondering if I should fix again, so will wait to see what replies come forward from those with far more knowledge than myself Quote Link to comment Share on other sites More sharing options...
harry flashman Posted July 25, 2012 Report Share Posted July 25, 2012 Hi, Market now pretty much prices another cut in the base rate to 0.25 from 0.50 by november, and given GDP was awful today and inflation is coming lower it's very hard to see it being raised any time soon. Bank of England new policy also in theory is supposed to fund banks to provide cheaper financing to businesses and consumers. For those reasons I would go for a tracker rather than a fixed rate in principal, bit I'm not a mortgages person really so will leave the detail to others. Quote Link to comment Share on other sites More sharing options...
Pedro Posted July 25, 2012 Report Share Posted July 25, 2012 We're having the same predicament. Saw the mortgage people on monday and their advice seems to be to stick with the Tracker. As said above, it's very unlikely the base rates going to go up anytime soon, (their words). P. Quote Link to comment Share on other sites More sharing options...
leeds chimp Posted July 25, 2012 Report Share Posted July 25, 2012 I have decided to fix ours as its only 0.3% above the base rate for 5 years....s only has to go up once and I would be on a better deal Quote Link to comment Share on other sites More sharing options...
ME Posted July 25, 2012 Report Share Posted July 25, 2012 I have an application being processed at the moment. Rightly or wrongly, I have fixed for 5 years. Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 25, 2012 Report Share Posted July 25, 2012 A 5 year fix will cost little more than a tracker at the moment.. what's the point in going variable when rates can't go down? Whilst it is unlikely we will see rates rising in the short to medium term due to direct inflation as we have seen at the back end of previous recessions, we are more than likely to see rates rising due to an ever increasing cost of borrowing accross europe... like it or not, whilst we are not part of the Euro we are part of Europe and our banks, if not european (i.e. Santander et al) are very much tied to them.. This will be due to a higher perceived risk at a national level.. government borrowing already over 7% in Spain, Italy close etc.. whilst not directly affecting consumers will filter through to some degree (remember, all the money ultimately comes from the same place!) once the Euro collapses (and anyone who thinks it won't is living in cloud cukoo land!) that figure will jump higher as the credit ratings of european countries are slashed... There are also many indirect inflationary pressures on the horizon.. the corn crop failures in the states will have a global impact on food prices and slightly closer to home, the potato crop failures here will also have an effect.. Oil is also on the up again and will always (other than the odd blip) move upwards.. that has a knock on effect on EVERYTHING.. Remember, inflation isn't just a measure of the demand for luxury goods.. it's the everyday stuff we can't do without that's the biggest issue... So... in conclusion.... don't get complacent... I can't remember the last time 5 year fixed rates were available at sub 4% (other than very short lived deals at the height of the boom.) Do not get sucked into the mentality that so many have... that where we are now is 'normal'.... it very much isn't and can't go on much longer... whilst there are a lot of borrowers in the UK there are even more savers and the pressure of thier unhappiness will soon start to show! With no investment growth there can be little real growth so ultimately, rates will have to rise if any sustainable recovery is to be seen (if it is at all possible now! The $$ will follow the euro!) Get a fix and think how lucky you are to have given yourselves 5 years of stability in a sea of utter chaos! Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 25, 2012 Report Share Posted July 25, 2012 I have decided to fix ours as its only 0.3% above the base rate for 5 years....s only has to go up once and I would be on a better deal 5 year fix for 0.8%? Where?!!! Quote Link to comment Share on other sites More sharing options...
colin lad Posted July 25, 2012 Report Share Posted July 25, 2012 I have decided to fix ours as its only 0.3% above the base rate for 5 years....s only has to go up once and I would be on a better deal chimp who did you get that fixed rate with colin Quote Link to comment Share on other sites More sharing options...
reddan Posted July 25, 2012 Report Share Posted July 25, 2012 (edited) 5 year fix for 0.8%? Where?!!! It will be above Lenders base surely. Prob making it something like 4.3% I am in the same boat on SVR now and can't bring myself to fix again yet. Edited July 25, 2012 by reddan Quote Link to comment Share on other sites More sharing options...
ferguson_tom Posted July 25, 2012 Report Share Posted July 25, 2012 We are going to try and fix our mortgage for 5 years, in pounds and pence for us the difference was £35 a month between fixed or tracker and for that it was worth it for the piece of mind that i do not have to even look at the news to see what the bank of england is doing. Also the huge savings people got in the last 5 years on trackers simply cannot happen again as the base rate cannot drop the same amounts. At most it will drop by another 0.25% but it can shoot up rather rapidly if we all of a sudden get a surge of economic activity over the next 5 years. Quote Link to comment Share on other sites More sharing options...
leeds chimp Posted July 26, 2012 Report Share Posted July 26, 2012 It will be above Lenders base surely. Prob making it something like 4.3% I am in the same boat on SVR now and can't bring myself to fix again yet. yes you are correct... I will soon be on 3.59% once the transfer of equity is complete which is lower than the 6.3% i was paying We are going to try and fix our mortgage for 5 years, in pounds and pence for us the difference was £35 a month between fixed or tracker and for that it was worth it for the piece of mind that i do not have to even look at the news to see what the bank of england is doing. Also the huge savings people got in the last 5 years on trackers simply cannot happen again as the base rate cannot drop the same amounts. At most it will drop by another 0.25% but it can shoot up rather rapidly if we all of a sudden get a surge of economic activity over the next 5 years. thats the way I am thinking as Vipa gave me some sound advice a few months back Quote Link to comment Share on other sites More sharing options...
Laird Lugton Posted July 26, 2012 Author Report Share Posted July 26, 2012 Thanks for the replies. I'll probably go fixed, I am a bit of a doom and gloom merchant so like fixes The biggest offset fix I can get is for 3 years at 4.29%. Still a saving on my old mortgage.... Quote Link to comment Share on other sites More sharing options...
al4x Posted July 26, 2012 Report Share Posted July 26, 2012 do you mean tracker OP or just let it roll onto the SVR if its the latter then you get no fees which can be huge at the moment and more importantly are not tied so can change if you decide to at any point in the future. A lot depends how flexible your finances are, I'm on a tracker at about 1.39% I think at the moment and know it will go up at some point but we have a fair bit of leeway with it. My other half before I met her went with her brokers suggestion of fixing each time her fixed term ended and was on a ridiculous amount but just reassured it was the safe way to go. Her £600 payment dropped to £400 when she let it roll onto the SVR, subsequently paid off but it was close to mis selling in this economy to be suggesting a 6% plus deal with fees attached as well The main thing to do is make sure you look at the fees as well as what percentage you get and also what redemption penalties there are were the worst to happen and you had to sell as some are frightening. Quote Link to comment Share on other sites More sharing options...
four-wheel-drive Posted July 26, 2012 Report Share Posted July 26, 2012 It has always seemed to me that when you buy a house it should be on a 25 year fixed rate it may work out to be more expensive or it could be cheaper in the end as I see it if you can afford it when you take it out as long as you do not become unemployed you should never be in a position where you could loose your home because you cannot pay your mortgage. Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 (edited) do you mean tracker OP or just let it roll onto the SVR if its the latter then you get no fees which can be huge at the moment and more importantly are not tied so can change if you decide to at any point in the future. A lot depends how flexible your finances are, I'm on a tracker at about 1.39% I think at the moment and know it will go up at some point but we have a fair bit of leeway with it. My other half before I met her went with her brokers suggestion of fixing each time her fixed term ended and was on a ridiculous amount but just reassured it was the safe way to go. Her £600 payment dropped to £400 when she let it roll onto the SVR, subsequently paid off but it was close to mis selling in this economy to be suggesting a 6% plus deal with fees attached as well The main thing to do is make sure you look at the fees as well as what percentage you get and also what redemption penalties there are were the worst to happen and you had to sell as some are frightening. Alex... you are right.. BUT... whilst you are sitting pretty on a silly tracker rate, for a new mortgage they just aren't available.. Most variable deals now come packaged with the same fees as fixed deals and most lenders SVR are now more expensive (by some margin) than moving to a fixed rate.. the likes of Nationwide (current horrendous service standards not withstanding) have some good sub 4% fixes with £600 fees which, on a mortgage of more than 60k makes it a cost effective option.. there are others but nationwide are coming out top of the tables for most mdeals at the moment unless you have little deposit/equity... The market has changed completely.... again... and even though I've been in this game for 2 decades now, if I didn't have my nose in the books everyday and have dedicated feeds coming in 6 times a day from the full time team at my network HQ, I wouldn't be able to keep up with current trends. Fixed rates are currently falling and SVRs are rising... with the financial implications of 'Solvency II,' 'The Retail Distribution Review,' and 'Gender Neutral Pricing' all hitting certain arms of the banks this year or early 2013, they are desperately trying to recapitalise as much as possible.. hence the rise in SVRs.. they are picking up cheap money due to the latest rounds of QE and it is this money that is being made available as cheap fixes... don't pass up an opportunity, it ai't real and it ain't gonna last! The main concern with sticking to variable rates to make a small saving (if at all possible anymore) is that the idea in most peoples minds (your philosophy too I would imagine) is to make hay while the sun shines and then as soon as rates look like they are going up, jump on to a fix... That's a great idea in principle until you realise that fixed rates have little to do with bank base rate and everything to do with swap rates, the problem being that the swap rates aren't ever mentioned in the media unless it's to do with Barclays allegedly somehow trying to manipulate them (erm... they are swap rates governed by supply and demand... manipulate them is what banks are supposed to do!) anyhoo... You hear on the news that the Bank of England has decided to increase BBR by .5%... right... time to fix methinks! So.. off you go to get your fix and are stumped when all you can get is 7,8,9%.... 'When did that happen?' you ask.... it happened in the background, quietly, while you were sitting watching the news for signs of BBR rising which has absolutely no direct bearing on anyone other than those with a tracker! So... don't be silly... get a fix... even if rates don't go up in the next 5 years (highly unlikely in the extreme) you won't get the chance again to fix so cheaply and you could just be breathing a sigh of relief i 2/3/4 years WHEN rates do shoot up... don't wait for the Euro to collapse... we're all in deep **** then and that WILL force rates up... higher than most people realise! What price peace of mind?! Edited July 26, 2012 by Vipa Quote Link to comment Share on other sites More sharing options...
shaun4860 Posted July 26, 2012 Report Share Posted July 26, 2012 when my fixed rate ran out they said I didnt owe enough to fix it again (£24k) they said if I remortgage for £34k I could fix it :blink: So I am on a tracker Quote Link to comment Share on other sites More sharing options...
kent Posted July 26, 2012 Report Share Posted July 26, 2012 after being baddly ripped off when all the mortgage swapping became the done thing to do, we looked for the most balanced and fair deal for both us and the lender. We chose a tracker that follows the BANK OF ENGLAND base rate at +0.5%, had no redemtion fees and a very short notice period. We are very happy bunnies and have moved it onto two other homes in the time we have had it. Linking to LIBOR not likely thanks interbank lending is way more expensive I dont think there are any deals like that anymore but in the past there were tempting offers that came our way like off set deals but we resisted, thank goodness Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 (edited) after being baddly ripped off when all the mortgage swapping became the done thing to do, we looked for the most balanced and fair deal for both us and the lender. We chose a tracker that follows the BANK OF ENGLAND base rate at +0.5%, had no redemtion fees and a very short notice period. We are very happy bunnies and have moved it onto two other homes in the time we have had it. Linking to LIBOR not likely thanks interbank lending is way more expensive I dont think there are any deals like that anymore but in the past there were tempting offers that came our way like off set deals but we resisted, thank goodness Interbank lending (Libor) is exactly the same (and often cheaper) than BBR... where do you get that from??? Unfortunately the days of reverting to BBR +.5% are long gone... BBR plus 3 maybe... if your lucky now! so... just count your blessings! You are thankful you turned down an offset? If you have savings offsets are fantastic... you will invariably save far more in interest payments than you would ever earn in savings interest! Me thinks you have either had some dodgy advice or are misunderstanding the markeplace and how it works? Edited July 26, 2012 by Vipa Quote Link to comment Share on other sites More sharing options...
al4x Posted July 26, 2012 Report Share Posted July 26, 2012 (edited) Alex... you are right.. BUT... whilst you are sitting pretty on a silly tracker rate, for a new mortgage they just aren't available.. Most variable deals now come packaged with the same fees as fixed deals and most lenders SVR are now more expensive (by some margin) than moving to a fixed rate.. the likes of Nationwide (current horrendous service standards not withstanding) have some good sub 4% fixes with £600 fees which, on a mortgage of more than 60k makes it a cost effective option.. there are others but nationwide are coming out top of the tables for most mdeals at the moment unless you have little deposit/equity... Its all turning into a bit of a con now with headline rates and decent sized fees that need to be re negotiated and charged again every few years. It just means you have to look in depth at what you are being offered. Lumping the fees onto the mortgage seems easy but the cost is high once you factor in repayments on that as well. My bank charges are from free to £1500 depending on deal but terms are between 2 and 10 years the initial cheapest looking deal can be far from it, especially if you have to get out of it some exit fees are horrendous the 10 year deal has a portion where if you needed out it would be 6% of the balance. You may be happy you're not going to need to sell but relationship break ups can put a large spanner in that works. p.s my offset has saved me over a grand in the last few years they work ok now but if rates go up and you have savings then the difference is huge. When I did my last but one house up and rates were 5% I had the renovation money set aside and the tally was considerable Edited July 26, 2012 by al4x Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 Its all turning into a bit of a con now with headline rates and decent sized fees that need to be re negotiated and charged again every few years. It just means you have to look in depth at what you are being offered. Lumping the fees onto the mortgage seems easy but the cost is high once you factor in repayments on that as well. My bank charges are from free to £1500 depending on deal but terms are between 2 and 10 years the initial cheapest looking deal can be far from it, especially if you have to get out of it some exit fees are horrendous the 10 year deal has a portion where if you needed out it would be 6% of the balance. You may be happy you're not going to need to sell but relationship break ups can put a large spanner in that works. p.s my offset has saved me over a grand in the last few years they work ok now but if rates go up and you have savings then the difference is huge. When I did my last but one house up and rates were 5% I had the renovation money set aside and the tally was considerable Not all the best deals out there come with fees.. Nationwide are reasonable or, you can pay a lower rate and pay a bigger fee (sensible if you have a big mortgage, you just need to find the cut off point) Virgin (Northern Rock) have good deals on the same principle with fees ranging from zero up and rates to match.. All a prospective purchaser has to do is work out what is the most cost effective way to do it in thier circumstances. The issue is there irrespective of mortgage type.. the better trackers/variables come with the same fees as the better fixes.. You do raise a valid point though... just make sure you don't get blinkered to the headline rate, take ALL the costs into account and stay away fron short term fixed rates.. pointless and potentially very costly in the current economy unless you are going to be paying the loan off as soon as it finishes then they may be a valid option. Quote Link to comment Share on other sites More sharing options...
Archie-fox Posted July 26, 2012 Report Share Posted July 26, 2012 We were on a 5 year fixed rate but that has come to a end..we are on a tracker one now and are 100 per month better off I guess it could swing the other way at any point... Quote Link to comment Share on other sites More sharing options...
kent Posted July 26, 2012 Report Share Posted July 26, 2012 Interbank lending (Libor) is exactly the same (and often cheaper) than BBR... where do you get that from??? Unfortunately the days of reverting to BBR +.5% are long gone... BBR plus 3 maybe... if your lucky now! so... just count your blessings! You are thankful you turned down an offset? If you have savings offsets are fantastic... you will invariably save far more in interest payments than you would ever earn in savings interest! Me thinks you have either had some dodgy advice or are misunderstanding the markeplace and how it works? Think on a bit then. i think we are both well aware of whats what, my wife is a very respected FD and qualified accountant and i ran a sucessfull buisness for 20yrs. Libor rates dont realy consern me personally but last time i looked it was a lot more than The Bank of England base rate, was that just when Barclays were doing thier thing? Now theres control for you only time i ever listened to a finatial advisor it cost us a packet, though he got a fair comission Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 Think on a bit then. i think we are both well aware of whats what, my wife is a very respected FD and qualified accountant and i ran a sucessfull buisness for 20yrs. Libor rates dont realy consern me personally but last time i looked it was a lot more than The Bank of England base rate, was that just when Barclays were doing thier thing? Now theres control for you only time i ever listened to a finatial advisor it cost us a packet, though he got a fair comission Oh please..... Libor is rarely far from BBR.. the deals that used to base themselves on libor were, in the main, sub prime deals.. I'm sure your wife is a fantastic and highly qualified accountant and I'm sure you ran a succesful business but that doesn't make either of you qualified or experts in financial services.. If that were the case the 9 chartered and 3 management accountants I have as clients simply wouldn't need me... Just because your wife is qualified in 1 area of numbers/money/finance, doesn't mean she is an expert in all, otherwise we would all just take one accountancy qualification and go and be an actuary or stock broker or protection consultant or accountant... not doing your wife down at all.. but how often in her day job does she actually analyze libor/bbr/swap rates etc... probably never! Show me the data where 1, 3 and 6 month Libor was significantly higher than BBR for the same period!? it wasn'y Quote Link to comment Share on other sites More sharing options...
al4x Posted July 26, 2012 Report Share Posted July 26, 2012 It always rings alarm bells on the net when people purport to be intelligent and well versed in business and can't spell for toffee. Usually rings the troll alarm well Quote Link to comment Share on other sites More sharing options...
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