• ARRSE have partnered with Armadillo Merino to bring you an ARRSE exclusive, generous discount offer on their full price range.
    To keep you warm with the best of Merino gear, visit www.armadillomerino.co.uk and use the code: NEWARRSE40 at the checkout to get 40% off!
    This superb deal has been generously offered to us by Armadillo Merino and is valid until midnight on the the 28th of February.

Interest Rates - where are they going?

#1
Laden question, this.

I am currently considering remortgaging away from an interest-only product. I am looking at a fixed-rate mortgage and am wondering whether it might be a good idea to secure 2, 3 or 5-year fixed rates in the light of growing rates.

But I would welcome some opinions on where people think rates are going. My own feeling is that global upwards pressure will overpower our own efforts to protect a very fragile housing market with gentle, benign, plannable increases. I think that this may be a mid-term phenomenon so am tempted by a five-year fixed rate.

What do we think?
 
#2
Market is going up to try and curb borrowing, but million dollar question is how high will it go-fixed rates are sensible but its getting harder to find a low % to fix at ,so yes try for a 5 year fix, at least you can plan without the uncertainty of a variable.
 
#4
I'm not an IFA so you don't have to listen to me if you don't want to HOWEVER.....

I've just taken out a 2 year fixed mortgage due to the fact in less than 2 years time, a general election will be called. And what do the politicians do in order to win votes??? They'll push to drop the interest rates. This time scale will fit in nicely with my current mortgage which means that in 2 years time, I will be in a very good position to negotiate a decent mortgage rate.

I'd go for a 2 year fixed rate if I were you and then be in the position to cherry pick a good rate.
 
#5
the_matelot said:
I'm not an IFA so you don't have to listen to me if you don't want to HOWEVER.....

I've just taken out a 2 year fixed mortgage due to the fact in less than 2 years time, a general election will be called. And what do the politicians do in order to win votes??? They'll push to drop the interest rates. This time scale will fit in nicely with my current mortgage which means that in 2 years time, I will be in a very good position to negotiate a decent mortgage rate.

I'd go for a 2 year fixed rate if I were you and then be in the position to cherry pick a good rate.
As hard as I may find to actually agree with something written by one of the "Senior Service" as they put it....I really think that Matelot has a real point. The incumbent government really will try to sweet talk the electorate into thinking that they are great with rate falls as the election grows near.
 
#6
All very well, Matelot, save for the fact that the Bank of England sets interest rates and the govt made it independent some years ago. The Bank is set an inflation target and interest rates are one of the tools to try to keep inflation at or around the target level.

Politically to try to interfere with inflation in order to try to influence interest rates would be difficult, and something of a ticking bomb in terms of being found out. I can't see it happening myself, even with this bunch of self-serving, totally unprincipled shysters.

Mind you considering some of the other sh1t they've got up to you can never tell ...
 
#7
schweik said:
All very well, Matelot, save for the fact that the Bank of England sets interest rates and the govt made it independent some years ago. The Bank is set an inflation target and interest rates are one of the tools to try to keep inflation at or around the target level.

Politically to try to interfere with inflation in order to try to influence interest rates would be difficult, and something of a ticking bomb in terms of being found out. I can't see it happening myself, even with this bunch of self-serving, totally unprincipled shysters.

Mind you considering some of the other sh1t they've got up to you can never tell ...
Ah, but the key phrase I used was that they'd push to lower the interest rates-I'm aware the Bank of England sets the interest rates and act independently. I agree with you in that politically, it's very dodgy to do so but lets face it, it's no less dodgy than the 45 min WMD claim made by Blair.

And that in itself means that the government of the day will do its utmost to lower the rates through whatever means possible.

Politically wrong? Definitely.
Good for Homebuyers? Definitely!
 
#8
the_matelot said:
schweik said:
Mind you considering some of the other sh1t they've got up to you can never tell ...
I agree with you in that politically, it's very dodgy to do so but lets face it, it's no less dodgy than the 45 min WMD claim made by Blair.
I think that we are seeing relatively eye to eye on this!
 
#9
With the caveat that you can't forecast these things over the medium term...

However, inflation is the major risk to the global economy in the short and medium term.

In the UK, the main tool that the MPC has to control it in the local economy is interest rates.

So I think rates will go up - maybe not to the breath stopping rates of the late eighties but maybe a slow grid up a couple of percent....

But I could be talking arse, it's been known....
 
#10
the_matelot said:
I've just taken out a 2 year fixed mortgage due to the fact in less than 2 years time, a general election will be called. And what do the politicians do in order to win votes??? They'll push to drop the interest rates. This time scale will fit in nicely with my current mortgage which means that in 2 years time, I will be in a very good position to negotiate a decent mortgage rate.

I'd go for a 2 year fixed rate if I were you and then be in the position to cherry pick a good rate.
Ah yes, but Brown is hinting heavily at a Spring General Election - so I forsee a new Government having a bit more freedom to hike rates pretty soon afterwards.
 
#11
Victorian_Major said:
Laden question, this.

I am currently considering remortgaging away from an interest-only product. I am looking at a fixed-rate mortgage and am wondering whether it might be a good idea to secure 2, 3 or 5-year fixed rates in the light of growing rates.

But I would welcome some opinions on where people think rates are going. My own feeling is that global upwards pressure will overpower our own efforts to protect a very fragile housing market with gentle, benign, plannable increases. I think that this may be a mid-term phenomenon so am tempted by a five-year fixed rate.

What do we think?
VM, I deal in this sort of thing, I am in property/real estate both here and overseas, if you would like more info, feel free to PM me, if ou would like to know about a mortgage which is interest only for the purposes of the taxman, but can also achieve ebt reduction.
 
#12
Just been through this too and finished up sticking with original lender 2 year interest only to add to original mortgage to buy Mrs M's Mums rented property which became available at a good discount.

Remember to take into account all charges - valuations, set up fees, additional insurance requirements, bank transfers etc
 
#14
Interest rate changes depend on a number of things as well you know, including what we in the trade call swap rates! Most lenders change their deals in advance of a rate change by the BOE.

When sourcing a mortgage for clients, the headline interest rate is important, but not the be-all-and-end-all! Clients with larger mortgages are sometimes beter to go down the route of larger arrangement fees if it gets them a lower rate. That being said, a number of my clients recently have opted for capped & collared rates when they've seen the figures in front of them. Over 19,000 mortgage deals available at any one time from over 190 lenders, but less than 10 capped rates deals! :hungry:
 
#16
Some interesting comments yesterday from the Governor of the Bank of England, which appear to indicate that he reckons another quarter to half percent is on the cards.

Telegraph

The pressures on both food prices (caused by the floods and F&M) and on the price of oil are intense and that will feed through to domestic inflation in due course.

Litotes
 
#17
The Independent has been reporting on this issue for number of months now....

That is not just a British issue: monetary policy worldwide has tightened and will tighten further. In the UK, we have in effect been warned of the probability of higher short-term interest rates by the Bank Governor. Expect also a further rise in euro rates.

But the more dramatic tightening has come from the financial markets, which have been increasing long-term rates by pushing up yields on long bonds worldwide.

The expectation of the consultancy Capital Economics for the Bank base rate is that it will go up soon to 5.75 per cent, then to 6 per cent in the autumn, and staying there for at least a year.

This may or may not turn out to be the case, though that expectation feels about right to me; the danger, if anything, is that rates will end up higher still. But a year or more at 6 per cent would change the tone of the economy, and most obviously it would affect the property market. So much as been written about house prices that there is not much to be added here, except perhaps to remind people that this is a global phenomenon. However, there is something to be said about commercial property and Capital Economics has come up with some brave predictions here.
Clicky

The true question is whether the Doves or Hawks set the tone for intereste rates in the coming year....global liquidy vs national stress.....and obviously the pain is likely to felt around the time of the next election then the independence of the BOE will be tested

If I were you I would consider either a 3 year fix or going for a capped mortgage....top end of the spectrum is 6.5% and then a hold before declining again, capping now might mean a little pain in the short term but over the longer term, 3-8 years out, it looks good
 
#18
Litotes said:
Some interesting comments yesterday from the Governor of the Bank of England, which appear to indicate that he reckons another quarter to half percent is on the cards.

Telegraph

The pressures on both food prices (caused by the floods and F&M) and on the price of oil are intense and that will feed through to domestic inflation in due course.

Litotes
Litotes,

Actually you should not have mentioned the 'flxxds' as technically this was a MxxP tasking and you are now in contravention of DXX 0X-XX6.

Ready to assist further as appropriate

PAW
 
#19
Over here (Denmark) fixed rate 30 year mortages are the norm, and it's only within the last 8 years or so that variable interest mortgages have become legal.

At present 30 year mortgages are at 5-6% interest, and variables can be had down to around 4%.

If you are really feeling adventurous, you can also take out a variable interest mortgage in a foreign currency.

I used to have my mortgage in Euros, and I have speculated on whether I should try and take my next mortgage in a currency that has über-high inflation. That way, within a year or two, I should be able to pay it off for the price of a packet of fags.

Regards
T_T
 

Latest Threads