2 questions to the finance wizards on here
How much will our bank rates going up over time affect mortgage rates? It seems like when they go down its the libor rate that affects the rates, whereas when they go up its the bank rate - anyway how much would our mortgage rates really go up, is this really as big a time bomb as people are saying or is it just going to affect the lucky mob who had bank rate matched/pegged interest mortgage rates?
Also how much will Euro rates dropping hold down our own rates?
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Bank Base Rate will directly affect those, like me, on a tracker mortgage as they are directly linked to Base Rate.it will also affect those on fixed rates where the fixed rate is for a short period and they revert to tracker rates (obviously once the fix expires).
3 monthLibor is tracking only about 3bps (0.03%) above Base Rate and in a functioning market has historically tracked Base Rate pretty closely therefore I would imagine if Base Rate increases banks may well increase their internal bank rates which would affect those on variable rate mortgage - this will be down to the bank but as Libor (should) be what banks borrow money at then it is likely that increases here will have a direct increase in pricing on banks internal rates.
I think it could be a time bomb but Bank of England will be aware and this is likely to keep them in check in respect to increases in Base Rate. Too many people have borrowed on mortgages over the last5 years against an artificially low interest rate environment and when they see their payments increase it will undoubtedly cause distress. That is why, whilst unpopular, the affordability tests coming in when taking out a mortgage now are absolutely the right thing for longer term sustainability and stability.
As for the Euro rate...somewhat outside my knowledge I am afraid, can't see an immediate connection but I am probably missing something.
Generally, deals aside, I would expect standard mortgage rates to maintain closely their differential with base rates.
I'm moving from variable (currently 2.5% for me) to a 5 year fix (3% on max 60% LTV).
Interesting snap shot from 2008
So what will bank and mortgage rates go to this time is the question I guess
Personally, I'd have started to increase rates, some months ago and I can see house prices tumbling from their peak (in London & the South East) in the next few years.
I'm not sure if they will ease back or fall quite sharply, but with rising rates and restricted lending, the demand will fall & so will property prices in the short/medium term.
Taking the nonsensical language out of it. This is the first time in years most of us homeowners have got a tiny bit pf breathing space. A few more quid can be spent im the shops and restaurants and building.
Surely that benefits all more than the few at the top by skinning me for an extra half a percent per calendar month? Or am I being too idealistic?
Unlesss, the Bof E come up with different measures, to cool the market, which is possible, due to the Canadian, Mark Carney, now in charge.
Risk is key now...if one has 40%+ equity and an income then with the help of the Web or a financial adviser you can cut a deal because you are an attractive punter. Put another way, I wouldn't want to be refinancing a 90% mortgage in 2017 if rates are up and my fixed rate deal is running out!
Thus any interest rate decision needs to consider that.
The truth of the matter though is that Christine Lagarde has spoken so Cameron and Osborne will roll over to have their tummies (and other bits probably) tickled.
I will have 90% mortgage and will probably look for a 5 year fixed rate or so. I have an appointment with a mortgage broker (although its a free service) on Saturday. Dont want to be up shit creek once the 5 year fixed rate expires!
The problem is it only seems to be people with lot's of money who know how it works
Not sure how anyone earning normal wages could get 15% for a first place. As you are living at mums you have a better chance of this but the better deals start at 75%
To the rest on here I would recommend that you speak to an Independent Mortgage Broker before you make a decision. Sure they will charge you a fee, if they are any good, but taking advise on rates and lenders from a mate down the pub is incredibility unlikely to ensure you end up with the best product.
http://www.davidcarnac.co.uk/
Don't think anyone knows for sure, just don't over stretch and you should be OK, leave a comfortable gap between income and mortgage payments.
:-(
I was speaking to an investment manager yesterday and their stance is that rates will start to go up this time next year but only very slowly and will rise no more than 2% over the next 3-5 years. As mentioned on here the differential between banks standard variable rates & the BOE base rate used to be around 2%, whereas now it is at least 3.5% and can be as much as 5%. This will be squeezed back down again once rates rise.
Certainly fixing your mortgage rate for 3-5 years at anything below 4% would seem sensible, although 2 year fixes just mean you will be looking to remortgage just as rates are increasing. tough one.
quite a few of my clients owe me big time when I managed to get them lifetime trackers at 0.39% above base back in 2007 - one even got. 0.1 below base !!!!