moragage options

[angellonewolf]

ok its that time and what to take generaly we been offered a 2 year 3 year or 5 year at the same apr 4.2 percent

what would you do in the climate bet on the rates droping a bit still yet and take the 2 or 3 year or take the 4.2 percent for the 5 and know your safe if things change

 

[qwakers]

i would go tracker right now, the rates are trending down and have a low risk of rising again, so locking in now is most likely just going to give you a higher total mortgage cost than letting it decrease back to sane levels in a year or 4.

 

[ajlelectronics]

Interest rates will follow the route that they always do in these circumstances. Economy will dive and so the interest rates go down. Then they start spraying money into the abyss, inflation goes rampant and then you are looking at much higher interest rates. I recall paying 15% in the 80s.

I would be fixing for as long as possible, just based on history.

 

[addjunkie]

Interest rates will follow the route that they always do in these circumstances. Economy will dive and so the interest rates go down. Then they start spraying money into the abyss, inflation goes rampant and then you are looking at much higher interest rates. I recall paying 15% in the 80s.

I would be fixing for as long as possible, just based on history.

My thoughts too, but its a gamble exacerbated by politicians, world leaders and various other fanatics and nut jobs.

 

[Beanwood]

Fix it for as long as possible - if they dropped below 4.2 consider the penalty and move to something cheaper?

 

[More Amps]

The UK long-term average rate is around 5.75%.

If your mortgage has a reasonably long term left to run (say 10 years or so), then any rate below 5.75% should leave you quids in (all other things being equal). That of course will not guarantee that you can't do better (or worse) depending which way rates move.

However, mathematicians and statisticians are well aware of the principle known as "reversion to the mean", and this is a simple way of saying that in the long term, the further anything like interest rates moves away from the average, the stronger the drive back to the average, it may over-shoot in either direction but will tend to go back to the average level.

In the real world, therefore, when rates are below average - look for a fixed rate - unless you believe rates are going to drop further. When rates are above average - well you don't want to fix your rate (unless you believe rates are going to climb further)

If in doubt, never forget that there are some very intelligent people being paid large sums of money to spend years thinking about nothing but which way rates might move and the effects any such movements might have. Never forget that not all of them are as clever as they think they are - remember Northern Rock?

Personally I know wouldn't last more than half an hour at a job like that - and I don't care how much money they wanted to pay me!

 

[addjunkie]

The UK long-term average rate is around 5.75%.

If your mortgage has a reasonably long term left to run (say 10 years or so), then any rate below 5.75% should leave you quids in (all other things being equal). That of course will not guarantee that you can't do better (or worse) depending which way rates move.

However, mathematicians and statisticians are well aware of the principle known as "reversion to the mean", and this is a simple way of saying that in the long term, the further anything like interest rates moves away from the average, the stronger the drive back to the average, it may over-shoot in either direction but will tend to go back to the average level.

In the real world, therefore, when rates are below average - look for a fixed rate - unless you believe rates are going to drop further. When rates are above average - well you don't want to fix your rate (unless you believe rates are going to climb further)

If in doubt, never forget that there are some very intelligent people being paid large sums of money to spend years thinking about nothing but which way rates might move and the effects any such movements might have. Never forget that not all of them are as clever as they think they are - remember Northern Rock?

Personally I know wouldn't last more than half an hour at a job like that - and I don't care how much money they wanted to pay me!

Well put, but Northern Rock wasn't really about interest rate cock ups, more to do with far far too many poor quality loans, to non creditworthy folk for more than the properties were worth, using borrowed money to do it, in an attempt to grow big and too fast. Basically Ridley and Applegarth got their sums wrong!

 

[angellonewolf]

oh for a crystal ball


tracker at the mo would put me above what there offering so rates would have to drop quite quick for me to benift id be better off just doing short term and go for the 2 year

Interest rates will follow the route that they always do in these circumstances. Economy will dive and so the interest rates go down. Then they start spraying money into the abyss, inflation goes rampant and then you are looking at much higher interest rates. I recall paying 15% in the 80s.

I would be fixing for as long as possible, just based on history.

the concensus of the few ive spoken to say the same thing book for the 5 years

Fix it for as long as possible - if they dropped below 4.2 consider the penalty and move to something cheaper?

the cost of getting out would be quite a lot so intrest rates would have to be at 1 ish percent to even make any sort of dent to buy our selfes out

The UK long-term average rate is around 5.75%.

If your mortgage has a reasonably long term left to run (say 10 years or so), then any rate below 5.75% should leave you quids in (all other things being equal). That of course will not guarantee that you can't do better (or worse) depending which way rates move.

However, mathematicians and statisticians are well aware of the principle known as "reversion to the mean", and this is a simple way of saying that in the long term, the further anything like interest rates moves away from the average, the stronger the drive back to the average, it may over-shoot in either direction but will tend to go back to the average level.

In the real world, therefore, when rates are below average - look for a fixed rate - unless you believe rates are going to drop further. When rates are above average - well you don't want to fix your rate (unless you believe rates are going to climb further)

If in doubt, never forget that there are some very intelligent people being paid large sums of money to spend years thinking about nothing but which way rates might move and the effects any such movements might have. Never forget that not all of them are as clever as they think they are - remember Northern Rock?

Personally I know wouldn't last more than half an hour at a job like that - and I don't care how much money they wanted to pay me!

Yes i don't think we will (i wont say never)see those sort of rates again
but if we do there will be a load of houses going up for sale as ive spoken to meny that need the mortgages to be not silly I was not in at the 16 percent times but do remember them




I'm prob going for the 5 year unless I realy see something drastic happening I know what I will be paying and 2 years (this is the shortest I can do with out up front fees) and in 2 years the rate could be 1.8 percent or back over to near 6 as it near was only a year ago

 

[More Amps]

Well put, but Northern Rock wasn't really about interest rate cock ups, more to do with far far too many poor quality loans, to non creditworthy folk for more than the properties were worth, using borrowed money to do it, in an attempt to grow big and too fast. Basically Ridley and Applegarth got their sums wrong!

I only used them as an example to show that while all banks and lenders have plenty of highly-paid staff analysing everything from top to bottom and side to side, the answers are always there, but sometimes people don't ask the right questions and so don't get the right answers...and sometimes they know the questions they should be asking but don't want to ask those questions for fear of rocking the boat or waving goodbye to their executive salaries... My apologies if that all sounds a little too Rumsfeldian!

 

[addjunkie]

I only used them as an example to show that while all banks and lenders have plenty of highly-paid staff analysing everything from top to bottom and side to side, the answers are always there, but sometimes people don't ask the right questions and so don't get the right answers...and sometimes they know the questions they should be asking but don't want to ask those questions for fear of rocking the boat or waving goodbye to their executive salaries... My apologies if that all sounds a little too Rumsfeldian!

It was a fair example.

 

[tom2207]

I would grab the 5 year deal , better the devil you know.

 

[Farside]

Well put, but Northern Rock wasn't really about interest rate cock ups, more to do with far far too many poor quality loans, to non creditworthy folk for more than the properties were worth, using borrowed money to do it, in an attempt to grow big and too fast.

Borrrow short and lend long, turned out to be a daft idea.

 

[hotponyshoes]

I think of it this way,

If you want to know exactly how much you will be paying each month and not have to think about it every year (or news broadcast) take the longest fixed rate.
You may pay more than someone else but that extra cost is just a payment for the peace of mind and lack of hassle.

If you want to pay the least amount possible go for the best rate. (This may not always be the shortest either!) In a years time go for the best rate again. And don't compare that to the 10yr you could have had a year ago!

The reality is, banks don't want to loose money. They pay people to work these rates out. They don't know what rates will be in 5yrs time but they also need to keep the 5yr rates low enough that the products actually sell.

Just consider the mortgage rates as the cost to invest in property. My wild guess is, you will be unlikely to loose out on a property investment. If rates do drop drastically you'll be paying over the odds on the mortgage but house prices will go up as they are more affordable so you'll still come out on top.

Get a bit of paper, start with the current 1yr vs 5yr rate, work out the difference. See what that difference is as a percentage of the property value.
Then consider if it's worth chasing that amount or whether the time would be better spend converting the loft to an extra bedroom or adding some extra insulation..

 

[angellonewolf]

I think of it this way,

If you want to know exactly how much you will be paying each month and not have to think about it every year (or news broadcast) take the longest fixed rate.
You may pay more than someone else but that extra cost is just a payment for the peace of mind and lack of hassle.

If you want to pay the least amount possible go for the best rate. (This may not always be the shortest either!) In a years time go for the best rate again. And don't compare that to the 10yr you could have had a year ago!

The reality is, banks don't want to loose money. They pay people to work these rates out. They don't know what rates will be in 5yrs time but they also need to keep the 5yr rates low enough that the products actually sell.

Just consider the mortgage rates as the cost to invest in property. My wild guess is, you will be unlikely to loose out on a property investment. If rates do drop drastically you'll be paying over the odds on the mortgage but house prices will go up as they are more affordable so you'll still come out on top.

Get a bit of paper, start with the current 1yr vs 5yr rate, work out the difference. See what that difference is as a percentage of the property value.
Then consider if it's worth chasing that amount or whether the time would be better spend converting the loft to an extra bedroom or adding some extra insulation..

im not worried about how much my house is worth it point less unless im going to sell and travel the world with the money

Just trying to guess what's the best option and I don't think they will lend much lower any way

 

[chunkytfg]

I look at Mortgage rates as 20% maths and 80% emotional. If you'd been offered 2yr, 3yr and 5yr deals with the 2yr being cheapest and 5 being most expensive which is the norm at the moment then I would be thinking to myself that the 5 year even though it was the most expensive is likely the best option. I like knowing for as long as possible that the payments will be the same. It gives me peace of mind to be able to budget knowing that while I could long term pay slightly more I have no uncertainty. From an emotional perspective I would even go as far as to say I would rather take a slightly worse deal with my own usual bank than I would have the hassle of my Mortgage being with some other bank and having to have a separate app just for it. I bank with Nationwide and everything is thought them. Current accounts, savings, Mortgage, Loans etc. It all ends up on the same app and is a one stop shop for all my money related things.

The only reason I could have for taking the 2/3yr deals would be If I was planning on moving or having some other life changing thing happen.

As youve been offered the same rat for all 3 lengths of time I would 100% take the 5 yr deal. It wouldnt even be a question.