Saturday, Mar 10, 2007
Slowly but surely the net tightens on debt junkies
Guardian: Does it still pay to be a rate tart?
During the past decade or so, millions of home owners have saved themselves a fortune by moving their mortgage every few years. Cut-throat competition in the home loans market has produced some great deals, with banks and building societies often throwing in freebies to entice people to defect. But more recently, many lenders have started pulling up the drawbridge and are deploying a range of tactics designed to clamp down on "rate tarts" who hop off to a rival as soon as their fixed or discounted rate period ends.
Posted by uncle chris @ 09:50 AM (143 views) Add Comment
4 Comments
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1. japanese uncle said...
Unless you secure a deal with fixed rate for the whole term, there is no good deal at all. In the UK market, rates can be trebled. It is really astonishing that people can be so short-sighted for such a heavy long term commitment. There is thin line between entrepreneurial and just reckless and stupid.
2. sirgoogle said...
The banks never give money away. They will always get it back off you - in this case via fees. I also believe that they get their money back if they loose any with borrowers with 5 or 10 year fixed rates. I bet these mortgages will appear expensive when the period for renewal comes in.
NB. Fixed rate mortgages may be why we have not seen mass hardship and a HPC - as the interest rate rises of the past year have simply not reached the borrowers - and will not for another 4 years. However when they do kick in it will be another story.
Any thoughts anyone?
3. talking rot said...
Sirgoogle
We were looking for a fixed rate mortgage in 2002 to 2004 - not to purchase of course but for research as we've not intention of buying until 2011/2012. Unsurprisingly there were some very good deals, including a 25-year fixed rate mortgage which was very tempting. However, while chatting to a number of Salespeople, the 5-year fixed rate was the most popular product. This is beyound me but it was cheaper then my preferred 25-year. 2002 to 2004 plus 5-years equals, well, about now really. I expect the jump for many will be from around 4 1/2 to 6 1/2+. This ties in nicely with the theory that property prices will decline from 2008 onwards.
I have seen too many posts stating "Next year will be an interesting year." If the market isn't declining by Jan 2009 then we're back off to Germany as the market is unlikely to crash. What is a crash? We're hoping [need] it to drop by 30% from peak in 3 years. Germany is a more civilised country anyway. The police are allowed to restrain violent criminals without worrying about the courts; the health service is very good and people shout at you if you do something naughty like dropping litter, or putting non-recyclable rubbish in the wrong bin. I like this self regulating community. Houses are cheap too.
4. sirgoogle said...
TR
Well hopefully the 5 year deals for the 2002 crowd will start to kick in now. But I doubt it will be enough.
You are right. I have been one of the posters you mention. I have completely given up hope of a HPC as I have been calling the peak of the HPC for the past 3-4 years now and been proven wrong again and again. I live in hope (you may note the occasional glimer of hope from me - but is mostly wishful thinking). Still can't grumble I have not been forced into a situation where I have yet had to buy a house in the UK. I rent and have done for the past 13 years (in Germany and The Netherlands). We do however face a decision point in August. If it goes wrong we return to the UK and face the appalling task of buying on pathetic wages - with no property in the UK to exchange (hence my hopes for a HPC) - or stay in The Netherlands - in which case (big family small house) we might also need to buy in a market which is much more expensive that the UK. Problem here is trying to find something worthwhile to buy, let alone affording it.
We used to live in Germany too (5 years). I recommend it. A fantastic country with polite safety concerned clean people (a little too neuotic about the past - but hey so are we about other things). Great Beer, amazing selection of bread and wonderful wholesome food (esp meats), well built houses. I would go back there like a shot.