Spaniel Posted July 26, 2012 Report Share Posted July 26, 2012 just going through the motions in changing mine Gone for a fixed and i have also just knocked 7 years off the mortgage, just waiting for final confirmation....ok its costs be a bit extra per month but i am already saving £40K by reducing the term Quote Link to comment Share on other sites More sharing options...
Vipa 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 Fare poynt Alex! Quote Link to comment Share on other sites More sharing options...
reddan Posted July 26, 2012 Report Share Posted July 26, 2012 Show me the data where 1, 3 and 6 month Libor was significantly higher than BBR for the same period!? it wasn'y To be fair at the height of the banking drama there was a destint difference in the two rates, it caused all kinds of media complaints that Banks were ripping off mortgage customers because the base rate was dropping and the savings weren't passed on to customers. They left out the bit about banks borrowing to lend on LIBOR and not BoE Base. Graph Link "Before the start of the 2007-08 credit crunch, the gap between the base rate and three-month sterling Libor was around 10 to 20 basis points. remains within pre-credit crunch levels. The gap widened massively (see below) in autumn 2008 but then was back to 'normal' in late 2009 and 2010. In August and September 2011, it moved out of the 'normal' range again, although not to the extent seen in the credit crunch." This was for a limited time only though. Quote Link to comment Share on other sites More sharing options...
kent 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 Did you know Richard Branson is also dyslexic? like myself, it comes with advantages as well as downsides. Quote Link to comment Share on other sites More sharing options...
kent Posted July 26, 2012 Report Share Posted July 26, 2012 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 I am not telling the fullest story here and don't wish to or feel the need because there are enough on here who know me personally and i have nothing to gain but i have no faith at all in finantial salesmen and still class myself a salesman. not all qualifications are the same as knoledge and experiance, i once had to qualfy and register to sell finatial products during the old days of wrap ups and latter ppi with loans- it was b/s and anyone who placed faith in it was a fool. It is my thoughts that you are on here to sell, just be honest about it and place an advert Quote Link to comment Share on other sites More sharing options...
kent Posted July 26, 2012 Report Share Posted July 26, 2012 To be fair at the height of the banking drama there was a destint difference in the two rates, it caused all kinds of media complaints that Banks were ripping off mortgage customers because the base rate was dropping and the savings weren't passed on to customers. They left out the bit about banks borrowing to lend on LIBOR and not BoE Base. Graph Link "Before the start of the 2007-08 credit crunch, the gap between the base rate and three-month sterling Libor was around 10 to 20 basis points. remains within pre-credit crunch levels. The gap widened massively (see below) in autumn 2008 but then was back to 'normal' in late 2009 and 2010. In August and September 2011, it moved out of the 'normal' range again, although not to the extent seen in the credit crunch." This was for a limited time only though. people should look at this link, check out the instability of rate fluctuations and the higher costs Quote Link to comment Share on other sites More sharing options...
reddan Posted July 26, 2012 Report Share Posted July 26, 2012 people should look at this link, check out the instability of rate fluctuations and the higher costs That was at the height of the financial crisis though. Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 I am not telling the fullest story here and don't wish to or feel the need because there are enough on here who know me personally and i have nothing to gain but i have no faith at all in finantial salesmen and still class myself a salesman. not all qualifications are the same as knoledge and experiance, i once had to qualfy and register to sell finatial products during the old days of wrap ups and latter ppi with loans- it was b/s and anyone who placed faith in it was a fool. It is my thoughts that you are on here to sell, just be honest about it and place an advert Good lord... have you seen my post count? now go back through the 2.5k plus of them and show me any where I have tried to sell my wares.. I have posted on this thread as I thought those interested may be interested in the views of an industry professional rather than the 'experts' out there who must know what they are talking about because they 'have a mortgage!' If my wiews aren't welcome.. no problem... I have plenty I could be doing other than writing essays and dishing out free advice... So... I'll let you take it from here Kent... all yours... I'll go and read some posts that are a tad more interesting! Quote Link to comment Share on other sites More sharing options...
Catamong Posted July 26, 2012 Report Share Posted July 26, 2012 I'm pretty sure that Vipa knows his stuff, but, having been a variable rate mortgage holder since 1976, I've seen a few ups and downs. My only comment would be that virtually everybody I've known that's opted for a fixed rate has lived to regret it, and many have sought to get out of what they originally thought looked like a good deal. Cat. Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 (edited) people should look at this link, check out the instability of rate fluctuations and the higher costs A difference of between but all and 1.5% (in a brief blip) between the two is hardly a great deal.. when base rate started falling after the crash 5 year swaps were up to 8%! As I said earlier, Libor tends to mirror BBR but is not directly related to it and the graph, I would say, illustrates that perfectly. The point is that neither BBR nor Libor have any real affect on the mortgage deals available today so don't get hung up on them. If you don't inimately understand the mechanics of swap rates then steer clear of them... would you suggest you know how hedge funds work in the real world just because a portion of your investments happen to be invested in one... of course not so why would you suggest you know how the mechanics of banking work? are you a qualified banker? and if you are suggesting that your training course to sell ppi is equal to my 4 years of professional qualifications and 100 hours a year of ongoing CPD plus 20 years experience then I am deeply insulted! Edited July 26, 2012 by Vipa Quote Link to comment Share on other sites More sharing options...
leeds chimp Posted July 26, 2012 Report Share Posted July 26, 2012 Good lord... have you seen my post count? now go back through the 2.5k plus of them and show me any where I have tried to sell my wares.. I have posted on this thread as I thought those interested may be interested in the views of an industry professional rather than the 'experts' out there who must know what they are talking about because they 'have a mortgage!' If my wiews aren't welcome.. no problem... I have plenty I could be doing other than writing essays and dishing out free advice... So... I'll let you take it from here Kent... all yours... I'll go and read some posts that are a tad more interesting! I will back him up on this point I asked him for some advice as I knew nothing about what to do when I came up for my deal end....he looked at the market and told me to stay where I was...could have "sold" me something but he did not.... :good: Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 I'm pretty sure that Vipa knows his stuff, but, having been a variable rate mortgage holder since 1976, I've seen a few ups and downs. My only comment would be that virtually everybody I've known that's opted for a fixed rate has lived to regret it, and many have sought to get out of what they originally thought looked like a good deal. Cat. I am inclined to agree with you cat... but... and it is a BIG BUT... we have never been in a position where there is only one way for rates to go! The other point people seem to miss when looking at fixed rates is the 'peace of mind' element... far more people, in my experience, would rather know what their payments will be for as long a period as possible than know they are saving a few quid... Remember folks... rates can't go down they can only go up and up they will go... sooner... later... a little... a lot.. who knows... if the worlds foremost financial minds can no longer accurately predict what is going to happen then I have little chance of getting it right. However, to those with a UK average sized mortgage, if rates went back up to pre crash levels they would see a £2-300 rise in monthly payments.. if rates went up to the historical average of 8% than that would mean a £4-500 jump and if rates got back up to the heady heights of the late 80's of 15% then we are up by £1,000 or more! not many householders could stand 8% let alone 15% so, the peace of mind a fix can bring, particularly in these unusual and turbulent times could be priceless! Quote Link to comment Share on other sites More sharing options...
Laird Lugton Posted July 26, 2012 Author Report Share Posted July 26, 2012 So I am hooked on offset mortgage but can't get anything more than a 3 year fix. Who will do an offset with a 5 year fix? Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 26, 2012 Report Share Posted July 26, 2012 So I am hooked on offset mortgage but can't get anything more than a 3 year fix. Who will do an offset with a 5 year fix? Chelsea BS Yorkshire BS Accord (high fees!) N & P rates not as good as non offset 5 year fixes though, by a good .5%+ Quote Link to comment Share on other sites More sharing options...
reddan Posted July 26, 2012 Report Share Posted July 26, 2012 I am inclined to agree with you cat... but... and it is a BIG BUT... we have never been in a position where there is only one way for rates to go! The other point people seem to miss when looking at fixed rates is the 'peace of mind' element... far more people, in my experience, would rather know what their payments will be for as long a period as possible than know they are saving a few quid... Remember folks... rates can't go down they can only go up and up they will go... sooner... later... a little... a lot.. who knows... if the worlds foremost financial minds can no longer accurately predict what is going to happen then I have little chance of getting it right. However, to those with a UK average sized mortgage, if rates went back up to pre crash levels they would see a £2-300 rise in monthly payments.. if rates went up to the historical average of 8% than that would mean a £4-500 jump and if rates got back up to the heady heights of the late 80's of 15% then we are up by £1,000 or more! not many householders could stand 8% let alone 15% so, the peace of mind a fix can bring, particularly in these unusual and turbulent times could be priceless! Amen Only problem is I fixed too early and it is now rolled off again. Currently with my LTV I can't bring myself to leave SVR so will risk it for the time being. Quote Link to comment Share on other sites More sharing options...
al4x Posted July 27, 2012 Report Share Posted July 27, 2012 I'm pretty sure that Vipa knows his stuff, but, having been a variable rate mortgage holder since 1976, I've seen a few ups and downs. My only comment would be that virtually everybody I've known that's opted for a fixed rate has lived to regret it, and many have sought to get out of what they originally thought looked like a good deal. Cat. That echoes my thoughts up to current times banks aren't in the game to loose money, its not a gamble the level they set fixed rates they know they can make money on them. However they have punted the SVR up to a point where it has no relation to the base rate which is ok at the moment and has maintained their profitability, but I can see the next ****storm happening with people who got on the tracker bandwagon too late and are paying 3 or 4% above base. Thats going to hurt if rates go back to 5% or more and will lead to serious levels of reposessions etc. Quote Link to comment Share on other sites More sharing options...
Ricko Posted July 27, 2012 Report Share Posted July 27, 2012 My fixed rate came to an end 3 or 4 years ago. I have been on SVR ever since. Saved a small fortune. When they start to move up i'll go for a 3 year deal with my current provider, very happy with them. Quote Link to comment Share on other sites More sharing options...
gyp Posted July 27, 2012 Report Share Posted July 27, 2012 I’m no expert in these matters at all; but the way I see it is, if the banks are offering 4.5% fixed rate for 5 years they strongly believe that the interest rate will not go above that in the five year period otherwise they would be loosing money? Quote Link to comment Share on other sites More sharing options...
al4x Posted July 27, 2012 Report Share Posted July 27, 2012 precisely gyp they aren't stupid, Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 27, 2012 Report Share Posted July 27, 2012 I’m no expert in these matters at all; but the way I see it is, if the banks are offering 4.5% fixed rate for 5 years they strongly believe that the interest rate will not go above that in the five year period otherwise they would be loosing money? Not quite as straightforward as it appears... in the banking and finance sector money is just like any other commodity. For example. Tesco buy 1 million tins of heinz beans at 20p a tin and then sell it on through thier distribution network for 40p a tin. After operating costs they may net 10 p per tin. Once they have bought the tins of beans the stock cost does not change further down the line, i.e. an a years time, that tin of beans will have still cost them 20p, it won't have mysteriously risen to 60p. With fixed rate mortgages, lenders 'buy' a tranche of money at a fixed rate over a certain period, that rate will be determined by the 3 or 5 or whatever year swap rate at the time, that may be £100m at 3% they then sell it on through thier distribution network for say 4.5%, after costs of maybe .5% they will net 1%. During that period the rate the bank paid for that money will not increase, the profit margin will remain static on that tranche of money irrespective in changes to bbr or swaps, once they have bought it, the price is fixed, just like the tin of beans. After the fixed period then they will be exposed to fluctuations in the markets but so will the end user so they are not out of pocket. The latest round of falls in fixed rates is due to the treasury offering up £80bn of QE specifically for the banks to lend on to consumers, again this will be bundled up and sold in tranches.. fixed for fixed rates, variable for variable rates etc... Banks (usually) do not lose out financially if rates rise during the life of a fixed rate. This is a very simplistic view and the long term swap rates do reflect economists and analysts views on future rate movements but it is more to do with setting prices on the wholesale money markets than retail banking (yes even money has manufacturers, wholesalers and retailers! like I said... no different to a tin of beans from this side of the glass!) Quote Link to comment Share on other sites More sharing options...
kent Posted July 27, 2012 Report Share Posted July 27, 2012 That was at the height of the financial crisis though. can we predict the height of a crisis that has obviously not ended? Quote Link to comment Share on other sites More sharing options...
pimpkiller Posted July 27, 2012 Report Share Posted July 27, 2012 Im not a home owner so dont have a mortgage but surely the point is if you look at a fixed rate and know you can afford it thats better than taking a gamble and finding out suddenly you cant afford to live in your house? isnt this exactly the sort of thing thats got the country into this trouble in the first place? Anyway I dont know about anyone else but doesn't anyone think we aint seen nothing yet? the credit card bill for wedding/jubilee/olympics hasn't landed through the post yet and massive unemployed/immigration/benefits/fuel cost/taxes/government taking money out your pocket giving it the banks/cost of food/lack of housing/lack of people actualy paying for housing/euro crisis, Im sure its going to get a lot worse yet. If someone offered me a fixed rate at the sort of rates they are talking Id snap their arm off, If I could actually get on the ladder with how much house prices unfortunately are Quote Link to comment Share on other sites More sharing options...
al4x Posted July 27, 2012 Report Share Posted July 27, 2012 Pimpkiller you're on the right lines but there are fixed and fixed some are attractive and they can be the safe option but only for a certain term, 5 years then if rates go up you'll have to re negotiate onto a no doubt higher rate. Its all about looking for the deal that suits your circumstances, going secure can cost you a serious amount of money my other half was always led by her advisor to go safe and I was shocked when I saw the rates she had been paying. Thats listening to a professional look at the scandals that have rocked the industry with payment protection etc these people at times can look more at what commission they can get from you rather than what is ideal in your situation. Everything about their operations and supervision says they don't operate like it but in putting the options to you and claiming to be independant I'm not convinced. Mortgage protection insurance is one that gets my goat last time round we had the hard sell on that what if this what if that what would you do if you were terminally ill etc and obviously it was a nice little earner for the bank and salesperson the cost was about a third of our mortgage repayment and we didn't want it but had to go through the process. Just couldn't get them to understand that with two of us in employment and 2 houses one paid off and lots of equity in the other that if the "worst" happened we would if we had to just sell the property with the mortgage on it. Maybe I've just had bad experiences with IFA's but I had an ex who worked for a large financial organisation handling the complaints against those who sold their products and she had a far worse opinion of the level of intelligence amongst them Obviously there are good and bad in all lines but it very much helps to have a good idea of what you want before you go through the door and do your own thorough research. Quote Link to comment Share on other sites More sharing options...
markm Posted July 27, 2012 Report Share Posted July 27, 2012 I used to have one of these mortgage things! Lol!!!!!!!!! Quote Link to comment Share on other sites More sharing options...
Vipa Posted July 27, 2012 Report Share Posted July 27, 2012 Pimpkiller you're on the right lines but there are fixed and fixed some are attractive and they can be the safe option but only for a certain term, 5 years then if rates go up you'll have to re negotiate onto a no doubt higher rate. Its all about looking for the deal that suits your circumstances, going secure can cost you a serious amount of money my other half was always led by her advisor to go safe and I was shocked when I saw the rates she had been paying. Thats listening to a professional look at the scandals that have rocked the industry with payment protection etc these people at times can look more at what commission they can get from you rather than what is ideal in your situation. Everything about their operations and supervision says they don't operate like it but in putting the options to you and claiming to be independant I'm not convinced. Mortgage protection insurance is one that gets my goat last time round we had the hard sell on that what if this what if that what would you do if you were terminally ill etc and obviously it was a nice little earner for the bank and salesperson the cost was about a third of our mortgage repayment and we didn't want it but had to go through the process. Just couldn't get them to understand that with two of us in employment and 2 houses one paid off and lots of equity in the other that if the "worst" happened we would if we had to just sell the property with the mortgage on it. Maybe I've just had bad experiences with IFA's but I had an ex who worked for a large financial organisation handling the complaints against those who sold their products and she had a far worse opinion of the level of intelligence amongst them Obviously there are good and bad in all lines but it very much helps to have a good idea of what you want before you go through the door and do your own thorough research. Alex... I have learned to respect your opinion and have grown to like you over the years but.. please... from a moral point of view, stop doing down mortgage protection insurances.. Whilst you may well be in a lucky position not to need such cover, most are not and I can vouch personally that critical illness cover and life insurance has kept the roofs of houses over many heads in times of desparate need and dispair! It can be the difference between life going on and not, particularly when there are children involved! Yes, advisers get paid for selling them, how else are they supposed to get paid for thier time and work.. we could start charging large fees but that wouldn't go down well.. yes the commission can be high but that is all based on the premium whhich is all based on many factors, the biggest being age.. someone in their mid 20s may only pay £25 a month for the same poicy you or I would pay over £100 for.. the younger chap would earn the firm £4-500, the older chap £2k but it doesn't matter whether the policy is bought through an adviser or direct from an insurance company, the same commission is paid just in bonuses rather than to a specific firm. Please also don't think that if I earn £2k off a policy I get £2k. My network takes 20%, my administrator takes 10% (minimum £50) and the introducer takes 50% of what's left so.. from the old chap I'm left with £720 and the young chap £175 (hardly city bonus levels!) bear in mind that a lot of hard work would get me 10 sign ups a month with an average premium of £40 and it doesn't take a genius to work out that yes, I do OK, but I'm certainly not rolling in it... then of course there are the clawbacks where they take the commission back off you if the policy is cancelled in the first 4 years! Anyhoo.. Back to my original response... I agree with what you are saying about fixed rates being a shortish term thing but in the past, when people were fixing at 6/7% no one expected rates to do what they did and yes, some (including me) were out of pocket when BBR dropped BUT.. I was still happy at the time as I knew what my payments were and didn't (no one did) know what the hell was going to happen next.. the huge drop in bbr combined with rounds of QE could have quite easily (was expected to even) pushed inflation up rapidly and caused a huge spike in interest rates, possibly back to 80s levels or worse! In hindsight, yes, it's easy to say.. @well... that was a waste of money!' but was it... really ... Back to today... I see absolutely no milage whatsoever in plumping for a variable mortgage (of any description) when a 5 year fix can be had for the same price (or .1/.2% more) it would only take one teeny weeny rate rise in the next 5 years to wipe out any teeny weeny savings you had made and , most variable rates have a limited deal life span anyway, meaning the re-negotiating bit is going to happen regardless. As I said earlier, we have NEVER, EVER been in this situation so the rule book really needs to be thrown out! 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