Interest Rates - where are they going?

Discussion in 'Finance, Property, Law' started by Victorian_Major, Jun 28, 2007.

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  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.
     
  3. Short term definitely up due to inflationary pressures. Agree that if you fix you can plan.
     
  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. 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. 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. 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. 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. 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
     
  13. Today's movement

    Trailed to death this morning on the news. May be another rise next month.
     
  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:
     
  15. Billy, please PM me, I have mortgages totalling over £2.5m...