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Ash4781

5Yr Fixed Falling Again

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I see there is a 3.89% 5 year fixed product on the market. Its quite annoying how the boe keeps the markets guessing. One minute inflation is a problem next they might have to do more qe and inflation is no longer a problem.

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HSBC had a rather nice 5yr fixed with 60% LTV. I can't remember the rate, but it's been withdrawn. Maybe they're factoring in a rate rise?

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I see there is a 3.89% 5 year fixed product on the market. Its quite annoying how the boe keeps the markets guessing. One minute inflation is a problem next they might have to do more qe and inflation is no longer a problem.

Yeah, but what are the fees? Is it just marketing?

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I see there is a 3.89% 5 year fixed product on the market. Its quite annoying how the boe keeps the markets guessing. One minute inflation is a problem next they might have to do more qe and inflation is no longer a problem.

its from 2009, but rates were lower then

http://www.lovemoney.com/news/property-and-mortgages/mortgages/239/0-mortgages-too-good-to-be-true

0%....

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I see there is a 3.89% 5 year fixed product on the market. Its quite annoying how the boe keeps the markets guessing. One minute inflation is a problem next they might have to do more qe and inflation is no longer a problem.

Better to borrow less capital at a higher interest rate than be on the hook for a high capital debt albeit at an attractive rate.

Although if I was buying now, fixed would be the way to go as long as the fix was 5 years or longer. There's going to be a nasty market dislocation sooner or later that forces rates up sharply (I don't believe that the BoE will willingly raise them by anything more than piffling amounts).

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yep, 10y at 4.99% if you can put 25% down, that has to be a winner (if you want to fix)

This is indeed attractive. I am really "Tired of Waiting".

Question: Is it better to buy now, fixing at 5% for 10 years? Or should we wait 2 years, 3?, 5?, and buy a cheaper house at a higher rate?

I've tried many times to estimate that, but the main variables there (house prices and interest rates within the next 10 years, and house prices in 10/12/15 years time) are too difficult to forecast.

( Not to mention the many non-financial considerations, like stability v flexibility, self-determination issues [she wants to decorate, put nails on walls, we would like to have a dog, etc]. )

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Quick math:

200K HOUSE

50K DEPOSIT

4% MORTGAGE

25 YRS

AFTER 5 YEARS:

130,657 REMAINING

47,520 PAID

Wait 2 years:

160K HOUSE

50K DEPOSIT

7% MORTGAGE

25 YRS

AFTER 5 YEARS:

100,278 REMAINING

46,620 PAID

+~15,000 rent

-~3,000 capital interest

==

Saving of 15-20k by waiting 2 years, prices dropping by 20%, rates going up by a few %.

Conclusion : Find a panicked/rushed seller now, grab a 10-20% discount, combine with great interest rates, get on with life.

That's what I've done, and I know many other people here have done similar, including RB.

Not sure about the 10 yr fix at 4.99%. What are the ERC on that? If it's a family home then that sounds like a plan. Personally I just bought my first house, 30% deposit with Nationwide fixed for 3.89% 5yrs. £400 fee, 95 application, +valuation because I know after 5 years I plan to move to the countryside to start a family, and no sooner than 5 yrs ;)

Interest swaps are looking low, doubt BoE will rise past 2% in the next 2 years, but I've done the math and the 5yr fix is still a great deal. Definitely fix it.

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(...)

==

Saving of 15-20k by waiting 2 years, prices dropping by 20%, rates going up by a few %.

Conclusion : Find a panicked/rushed seller now, grab a 10-20% discount, combine with great interest rates, get on with life.

:lol: yep, exactly, I am tempted.

That's what I've done, and I know many other people here have done similar, including RB.

Not sure about the 10 yr fix at 4.99%. What are the ERC on that? If it's a family home then that sounds like a plan. Personally I just bought my first house, 30% deposit with Nationwide fixed for 3.89% 5yrs. £400 fee, 95 application, +valuation because I know after 5 years I plan to move to the countryside to start a family, and no sooner than 5 yrs ;)

Interest swaps are looking low, doubt BoE will rise past 2% in the next 2 years, but I've done the math and the 5yr fix is still a great deal. Definitely fix it.

Thanks fadeaway. We'll think about it.

And we would only go for a 10 years if it were transferable to the next property. Not sure if these are available. Not actually looking into it yet. I think prices in this area will fall fast between now and Jan/Feb 2012 (EA's stocks are piling up fast), and interest rates shouldn't go up by much - guessing this though.

.

Edited by Tired of Waiting

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11641.20110704205205.png

http://www.stat-search.boj.or.jp/ssi/cgi-bin/famecgi2?cgi=$graphwnd_en

If we are indeed turning Japanese then there rates have been under 1% for 15 years.

Was Japan a political choice, or a pact, between savers and the state? Low IR but low inflation? Or was it forced on them by market forces?

Merv can print it, politically unencumbered, even with inflation at 5%.

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yep, 10y at 4.99% if you can put 25% down, that has to be a winner (if you want to fix)

HSBC 4.29% at 70% LTV on a 5 year fix but don't do it at 60% although they used to and its been creeping up for months now.

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Conclusion : Find a panicked/rushed seller now, grab a 10-20% discount, combine with great interest rates, get on with life.

That's what I've done, and I know many other people here have done similar, including RB.

Yes. Did just that in late 2009. :)

Just about to have my 2nd baby and couldn't be more content.

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Its quite annoying how the boe keeps the markets guessing. One minute inflation is a problem next they might have to do more qe and inflation is no longer a problem.

Nothing to dow ith inflation. Its GDP they are worried about. The will let inflation rip to 'save' the economy. However, I feel RPI has peaked going into next year as the recession brings lower rates of price increases.

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(...) The will let inflation rip to 'save' the economy.

Yes, I think you are right.

However, I feel RPI has peaked going into next year as the recession brings lower rates of price increases.

I didn't get that though. "Let inflation rip", but below 5%?

Sorry, I don't mean to be annoying, just trying to understand it really.

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Quick math:

200K HOUSE

50K DEPOSIT

4% MORTGAGE

25 YRS

AFTER 5 YEARS:

130,657 REMAINING

47,520 PAID

Wait 2 years:

160K HOUSE

50K DEPOSIT

7% MORTGAGE

25 YRS

AFTER 5 YEARS:

100,278 REMAINING

46,620 PAID

+~15,000 rent

-~3,000 capital interest

==

Saving of 15-20k by waiting 2 years, prices dropping by 20%, rates going up by a few %.

Conclusion : Find a panicked/rushed seller now, grab a 10-20% discount, combine with great interest rates, get on with life.

Correct numbers, wrong conclusion.

After 5 years with ~0 percent WAGE inflation, having a 100K or 130K debt makes a sizeable difference.

Guess who is doing to be able to refinance cheaper at the end of 5y fix? An average person with debt-to-income (DTI) ratio

130/27=4.81 or DTI 100/27=3.7? (~27K is average UK salary http://career-advice.monster.co.uk/salary-benefits/pay-salary-advice/uk-average-salary-graphs/article.aspx)

EDIT: math

Edited by matroskin

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Was Japan a political choice, or a pact, between savers and the state? Low IR but low inflation? Or was it forced on them by market forces?

Merv can print it, politically unencumbered, even with inflation at 5%.

I think it was more the Japanese trying to avoid admitting their banks are insolvent, they've managed to extend and pretend now for 20 years.

If I'm being honest I think time is running out for the Japanese, although it's running out for everyone.

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Better to borrow less capital at a higher interest rate than be on the hook for a high capital debt albeit at an attractive rate.

Although if I was buying now, fixed would be the way to go as long as the fix was 5 years or longer. There's going to be a nasty market dislocation sooner or later that forces rates up sharply (I don't believe that the BoE will willingly raise them by anything more than piffling amounts).

I think a 5 year fix is a very dangerous product. What happens after the 5 years?

If house prices have gone down you no longer have a your deposit and no one will give you a good rate. Your lender can charge as much as he likes then.

With a life time tracker at least you know where you are for the full term of the mortgage.

OK lets say BofE rates go up to 10% for a few years you would be pleased you picked a fixed rate yes?

But if BofE rate goes up to 10% your house would have halved in value. Now try picking a good mortgage deal.

Edited by gf3

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After the 5 year fix you automatically go to SVR

Cheshire Mortgage Corporation has been highlighted as the lender with the highest SVR in the mortgage market - currently 12.5%, more than double the industry’s average of 4.79%.

and who sets the svr?

cant the banksters just set it to what ever they want

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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