Interest rates

[Amarillo]

Four years ago we returned from a 12 month long trip touring around the European Union.

One of the first things I did was look for a fixed rate mortgage deal. At the time I thought I was being a bit of a goof by going for a 2.49% rate fixed for ten years over a 1.59% rate fixed for five years, especially after rates were later cut to 0.1%.

With the recent rate rise, probably with more to come, that goofy choice is beginning to feel enlightened - my 2.49% is fixed until October 2028, at which time the mortgage will be fully repaid.

I took out my very first mortgage in 1990. My mortgage rate soon climbed to a shocking 15.75%.

 

[sidepod]

But how much WAAAAAAYYY over have you paid in the last 4 yrs?

Whatever the banks are offering, do the opposite.

 

[Mattsv]

95% of all mortgages taken now are fixed rate. Some will get a shock as their rates roll off and only higher options are available - albeit even after today's announcement rates are still relatively low. Luckily I paid off our mortgage 18 months ago and the only borrowing we have is for the van which is at a fixed rate. Many however will not be as lucky. Fortunately the FCA reminded all lenders recently of their responsibility to support all customers in financial difficulties, so forbearance and term extensions should continue to be offered where appropriate. However, the cost of borrowing for Lenders has risen again and all lenders will be reassessing the pricing of any new offers...

 

[andyinluton]

But how much WAAAAAAYYY over have you paid in the last 4 yrs?

Loads by my calculation.

I recon my 25 year variable rate deal tracking at 0.25% over base rate is better.

 

[Amarillo]

But how much WAAAAAAYYY over have you paid in the last 4 yrs?

Whatever the banks are offering, do the opposite.

0.9% over the five year rate for 5 years has been my loss. That’s a loss of £900 per £100,000 of borrowing.

So long as my saving in the second five year period is >0.9%, which seems likely, I made the right choice.

But also there is the certainty a ten year fixed rate gave to me, which has helped with longer term planning as I approach 60 and full retirement.

 

[johnyboy]

It's funny hearing about the "highest rates in 14 years" that was precisely the time I decided overpaying was a good choice - you only have to look at the graph to know just how odd the last 14 years have been.

 

[Amarillo]

Loads by my calculation.

I recon my 25 year variable rate deal tracking at 0.25% over base rate is better.

£4,500 per £100,000 of borrowing over five years.

If your 0.25% over BR fixed for 25 years was not available in August 2018 it is not a fair comparison.

 

[The Saint Essex]

There are always winners and losers, just have to make the right decision for you at the time!

 

[Amarillo]

There are always winners and losers, just have to make the right decision for you at the time!

Quite right.

The clincher for me was the ten year certainty, not the winning or losing. But it is still nice to think that it might turn out to be advantageous. I note that my current lender has now bumped its five year fixed rate up to 3.59%. (Seven year is cheaper at 3.49% and ten year 3.69%).

 

[The Merle]

I use to have .18% above base rate lifetime tracker that still beats any of them fixed rates

 

[GrumpyGranddad]

What’s a mortgage?

 

[Amarillo]

What’s a mortgage?

Death - in French.

 

[GrumpyGranddad]

What’s a mortgage?

Seriously though, when I was a young man with 3 kids and a mortgage, interest rates were sky high. It was a real challenge. Then as I approached and went into retirement, interest rates were rock bottom due to central bank policies after the 2008 crash. A double whammy on our family finances. Selfish I know, but i’m enjoying the current interest rate rises. Let’s all be honest we knew the quantitive easing would have to be paid back sooner or later.
Until recently none of my children had ever experienced an increase in mortgage rates. I’m pleased they’ve had the foresight to fix their rates for as long as possible.

 

[sidepod]

I recall 7 years ago when we biffed off the mortgage, huge sense of relief and security.

 

[soulstyledevon]

Paid off my Mortgage at 38 years old 5 years ago…
Then moved and decided to start all over again. My 5 year fixed, finishes Jan 23, now looking for a new deal and wondering wether to fix for 3 years or roll the dice and hope rates fall later next year….

 

[GrumpyGranddad]

Paid off my Mortgage at 38 years old 5 years ago…
Then moved and decided to start all over again. My 5 year fixed, finishes Jan 23, now looking for a new deal and wondering wether to fix for 3 years or roll the dice and hope rates fall later next year….

Hi @soulstyledevon , I reckon the rate cycle will be more like 5 years. Can’t see rates falling in 2023.

 

[soulstyledevon]

Hi @soulstyledevon , I reckon the rate cycle will be more like 5 years. Can’t see rates falling in 2023.

I did wonder, if we could ride out the next 12 months and Putins war. Would we see a big swing the other way…?

 

[Amarillo]

Paid off my Mortgage at 38 years old 5 years ago…
Then moved and decided to start all over again. My 5 year fixed, finishes Jan 23, now looking for a new deal and wondering wether to fix for 3 years or roll the dice and hope rates fall later next year….

I fully repaid my first mortgage in 2002 and saved heavily until 2011. I remortgaged my flat as a BTL, used that as a deposit for our house, and got a residential mortgage for our house. My savings went on a full refurbishment of our house.

During the period of ultra low interest rates we switched from
savers to borrowers - at one point we had over £700,000 of mortgage debt on our house and five BTL flats.

It has been a rewarding 12 years, but the era of cheap money now seems to be at an end. We must repay our remaining debt fast to avoid the BTL mortgage crunch coming to us at the end of October next year.

 

[westfalia]

I did wonder, if we could ride out the next 12 months and Putins war.

Or Bidens war.
Depending how you see it.

 

[pjm-84]

I jumped at a tracker at 0.82 over base back in November 2008. I'm still happy with it. So I haven't jumped or moved around in the last 14years. No arrangement fee / product fee or hassle of trying to arrange a deal.

So I'm now paying 3.07% and inflation is >9%. I'm still happy.

 

[WelshGas]

Or Bidens war.
Depending how you see it.

Certainly not Scholz’s war.

 

[NoviceCaliOwner]

I jumped at a tracker at 0.82 over base back in November 2008. I'm still happy with it. So I haven't jumped or moved around in the last 14years. No arrangement fee / product fee or hassle of trying to arrange a deal.

So I'm now paying 3.07% and inflation is >9%. I'm still happy.

I’ve got a 1.75% on top of bank rate tracker mortgage at the moment and wondering if I should fix for the next 2 years …. My current bank 2 years fixed is offering 4.24% fixed (nationwide) … obviously haven’t done any shopping around as yet or consulted Martin Lewis website… so with the new hike I’ll be on 3.99% fml

 

[Amarillo]

I’ve got a 1.75% on top of bank rate tracker mortgage at the moment and wondering if I should fix for the next 2 years …. My current bank 2 years fixed is offering 4.24% fixed (nationwide) … obviously haven’t done any shopping around as yet or consulted Martin Lewis website… so with the new hike I’ll be on 3.99% fml

Nationwide are offering a ten year fix at 3.99% + £999 fee.

Do the calculations and see if on that rate you can repay your mortgage in full over ten years. If you can, that would give you certainty.

It’s fascinating that a ten year fix is cheaper than a two year fix. The lender must be convinced that rates will be dropping again in the next 2-10 years.

 

[subthree]

What’s a mortgage?

We were in that club 7 years ago, then we moved. Only 18 months to go and then we will be saying "Raise rates for us savers", or I'll be thinking "how on earth will our kids afford that?".

 

[soulstyledevon]

Nationwide are offering a ten year fix at 3.99% + £999 fee.

Do the calculations and see if on that rate you can repay your mortgage in full over ten years. If you can, that would give you certainty.

It’s fascinating that a ten year fix is cheaper than a two year fix. The lender must be convinced that rates will be dropping again in the next 2-10 years.

We have a call next Friday with Barclays to see what they have available. Early indications look like a 5y fix is cheaper than a 2y
Trouble is, I want to extent the Mortgage to finish the current renovation which we were due to start next spring. However, with the economy looking gloomy, I’ve decided to hold fire and wait 24 months, to see how things pan out…