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Sancho Panza

96Pc Of Home Buyers Fix Mortgage Rate

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Telegraph 25/3/14

'More than 95pc of home buyers are choosing to fix their mortgage rate despite the rising cost of fixed deals and the increased chance that a rate rise could be delayed. The Mortgage Advice Bureau’s National Mortgage Index shows more than 19 in 20 buyers applied for a fixed-rate mortgage in February.

The cost of fixed rate deals is rising as lenders prepare for the Bank of England to increase Bank Rate from its record low of 0.5pc. Two, three and five-year fixed deals rose by between 0.06 and 0.08 percentage points in the month to February.

MAB_fixed_rates_2_2862201a.jpg

However, news today that inflation fell to 1.7pc in February – its lowest level since October 2009 – will ease pressure on the Bank of England to raise interest rates. It is expected that rates will go up at some point in 2015, but if inflation remains low it could be towards the middle or end of the year.

Tracker mortgages, which move in line with the Bank Rate, fell by 0.6 percentage points to 2.82pc in February – the lowest recorded average in over six years. Despite the cheap rates borrowers are increasingly reluctant to take out a tracker deal given the uncertainty around interest rates.

Many are also wary of tracker deals after Bank of Ireland and West Bromwich increased the rate for thousands of borrowers even though there was no change to Bank Rate.

The housing market is continuing to see an increase in activity, according to the Index. Mortgage applications for home purchases rose 33pc between January and February and 62pc compared to February 2013. Remortgage applications grew 16pc in the month to February and 49pc year-on-year.

Figures from the Office for National Statistics, published today, show UK house prices increased by 6.8pc in the year to January. All regions saw prices rise – by 7.1pc in England, 6.9pc in Wales, 1.4pc in Scotland and 2.7pc in Northern Ireland.'

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Seems sensible, I'd always prefer a fixed deal unless it was substantially higher interest rate. Of course you will end up paying the same on average, but its nice to have the security of knowing exactly what you are paying

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Seems sensible, I'd always prefer a fixed deal unless it was substantially higher interest rate. Of course you will end up paying the same on average, but its nice to have the security of knowing exactly what you are paying

Eh? Workings?

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This is why the 2015 0.1% IR ratchets will have no impact on values.

Any correction is years away now. Prices will just top out at some daft multiple of avg. earnings, whilst the gov of the time throws the kitchen sink at keeping them there.

It's now more probable, in my view, that now will be viewed later as a good time to buy despite the lunacy of it all.

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This is why the 2015 0.1% IR ratchets will have no impact on values.

Any correction is years away now. Prices will just top out at some daft multiple of avg. earnings, whilst the gov of the time throws the kitchen sink at keeping them there.

It's now more probable, in my view, that now will be viewed later as a good time to buy despite the lunacy of it all.

Whether this is a good time to buy depends on rents. We need proper protection of tenants, leave house owning to the debt slaves B)

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Whether this is a good time to buy depends on rents. We need proper protection of tenants, leave house owning to the debt slaves B)

Exactly.

Pricing of the gross yield is a good way of assessing long term value.

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However, news today that inflation fell to 1.7pc in February – its lowest level since October 2009 – will ease pressure on the Bank of England to raise interest rates. It is expected that rates will go up at some point in 2015, but if inflation remains low it could be towards the middle or end of the year.

Convenient that house price growth approaching 10% YoY isn't included in the inflation figures...

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So where do I fix my tenancy so I don't get another above inflation rent rise?

Which of the four Tory parties I'm supposed to vote is going to freeze or fix rents?

Edited by aSecureTenant

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Exactly.

Pricing of the gross yield is a good way of assessing long term value.

And that is what QE is all about. Reducing the yield on the lowest risk asset AAA government (or AA as they are now :)) bonds, forcing rent seekers out into riskier assets.

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So where do I fix my tenancy so I don't get another above inflation rent rise?

Which of the four Tory parties I'm supposed to vote is going to freeze or fix rents?

Surely you mean socialist parties as they all want to socialise debt.

"The big society" :rolleyes:

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Tracker mortgages, which move in line with the Bank Rate, fell by 0.6 percentage points to 2.82pc in February – the lowest recorded average in over six years. Despite the cheap rates borrowers are increasingly reluctant to take out a tracker deal given the uncertainty around interest rates.

Uncertainty around Interest rates? They have been rock bottom for five years, how much more certain can they be? I agree the only way is up, but in all likelihood they will only edge up 1-2% in the next couple of years. Also all these fixed rates come to an end in 2-5 years and then you get stuck on the rate the mortgage provider decides to stick you on. Fortunately I got onto the Nationwide BMR along with around ¾ million others which they can't touch without stirring up a real hornet's nest.

Best 2 year fix 2.79% reverting to 3.99% (or whatever the rate is at the time)

Best 3 year fix 2.39% reverting to 4.99% (or whatever the rate is at the time)

Best 5 year fix 2.95% reverting to 4.99% (or whatever the rate is at the time)

Best variable 1.99% (tracks BoE rate)

So unless rates rise by 2-3% very quickly, variable looks like the better bet.

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Surely you mean socialist parties as they all want to socialise debt.

"The big society" :rolleyes:

Can we settle on Corporatist? In which very large TBTF companies wax lyrical about the wonders of capitalism - especially when it comes to executive pay - whilst sucking harder on the teat of the state than a vacuum cleaner on a backbencher's todger..

Edit - on topic.. a real cynic would say that the drip-feed of 'Fix now!' is more to do with scaring people off of pre-2007 BoE-tied tracker deals than a real risk of serious interest rate hikes.

Edited by fluffy666

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Can we settle on Corporatist? In which very large TBTF companies wax lyrical about the wonders of capitalism - especially when it comes to executive pay - whilst sucking harder on the teat of the state than a vacuum cleaner on a backbencher's todger..

Edit - on topic.. a real cynic would say that the drip-feed of 'Fix now!' is more to do with scaring people off of pre-2007 BoE-tied tracker deals than a real risk of serious interest rate hikes.

surely they are more profitable?

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I always preferred variable interest for the following reason.

I found that the variable rate repayment mortgage had no charges for overpaying (and the interest was calculated daily). This meant that any extra money I managed to save up was available for me to pay of additional chunks and effectively cut the term of the mortgage. I found it was a great way of saving because the 'effective' return on your money is what they are charging you. I think I was getting about 10-15% yield.

I used to arrive at the Halifax and pay of big chunks like 5 thousand in a single visit. The lady at the counter would look a me like I was a madman (this was in the heady-days of the early 2000s when everybody else was borrowing like crazy). She always asked me if I wanted to adjust the payments but I didn't. I adjusted the term a few times though (from 15 years down to about 5).

Eventually I had about 50 quid left outstanding and then I adjusted the payments, just to be annoying. I think the monthly repayment was about 7p per month. I used to get statements every few months with 0.07. It was very amusing. It was also a cheap way to get the bank to look after the deeds.

Eventually I got bored with this and payed the outstanding off.

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I always preferred variable interest for the following reason.

I found that the variable rate repayment mortgage had no charges for overpaying (and the interest was calculated daily). This meant that any extra money I managed to save up was available for me to pay of additional chunks and effectively cut the term of the mortgage. I found it was a great way of saving because the 'effective' return on your money is what they are charging you. I think I was getting about 10-15% yield.

I used to arrive at the Halifax and pay of big chunks like 5 thousand in a single visit. The lady at the counter would look a me like I was a madman (this was in the heady-days of the early 2000s when everybody else was borrowing like crazy). She always asked me if I wanted to adjust the payments but I didn't. I adjusted the term a few times though (from 15 years down to about 5).

Eventually I had about 50 quid left outstanding and then I adjusted the payments, just to be annoying. I think the monthly repayment was about 7p per month. I used to get statements every few months with 0.07. It was very amusing. It was also a cheap way to get the bank to look after the deeds.

Eventually I got bored with this and payed the outstanding off.

Now that's interesting. One of the stated intentions of FLS was to pitchfork borrowers onto short-term fixes, ostensibly so they could take advantage of lower rates. If what you're saying about overpayment penalties is true across the board then in the present environment where world + dog is striving to deleverage as fast as possible it's the banks who are benefitting most by keeping borrowers on fixed rate terms.

Anyway, props to you for overpaying, and especially that merry little dance at the end with the deeds. Most excellent.

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I always preferred variable interest for the following reason.

I found that the variable rate repayment mortgage had no charges for overpaying (and the interest was calculated daily). This meant that any extra money I managed to save up was available for me to pay of additional chunks and effectively cut the term of the mortgage. I found it was a great way of saving because the 'effective' return on your money is what they are charging you. I think I was getting about 10-15% yield.

Part-redemption was the best means of saving prior to 2008 and like you I just continually overpaid. Then my mortgage rate dropped to 2.5% and as I had ISAs that were paying 3.75% I stopped. When I needed some money for house improvements, I was able to draw on the overpaid balance rather than dipping into my savings.

The flexibility of variable rate interest only mortgages has worked in my favour by paying down when I could.

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it's the banks who are benefiting most by keeping borrowers on fixed rate terms.

They sure are, every time you get a fix the mortgage providers charge an arrangement fee. Anything up to £2000

How about this "deal" from Skipton....

Fixed until 31/05/16 3.89% 5.49% 5.5% 90% £1995 fee

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Uncertainty around Interest rates? They have been rock bottom for five years, how much more certain can they be? I agree the only way is up, but in all likelihood they will only edge up 1-2% in the next couple of years. Also all these fixed rates come to an end in 2-5 years and then you get stuck on the rate the mortgage provider decides to stick you on. Fortunately I got onto the Nationwide BMR along with around ¾ million others which they can't touch without stirring up a real hornet's nest.

Best 2 year fix 2.79% reverting to 3.99% (or whatever the rate is at the time)

Best 3 year fix 2.39% reverting to 4.99% (or whatever the rate is at the time)

Best 5 year fix 2.95% reverting to 4.99% (or whatever the rate is at the time)

Best variable 1.99% (tracks BoE rate)

So unless rates rise by 2-3% very quickly, variable looks like the better bet.

I've been on a 1.99% (1.49% OVER BASE) Tracker since 2009, the month I completed BOW BR went to 0.5% and stayed there. Every year fireinds and VI's tell me to get on a fixed rates are rising. They will rise but even a base rate back to 3% will give me a better rate than i could have fixed at a few years ago. And if you can get 5 year fixes now around 3% that tells me the banks dont think rates are going that high for the rest of this decade.

M

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I've been on a 1.99% (1.49% OVER BASE) Tracker since 2009, the month I completed BOW BR went to 0.5% and stayed there. Every year fireinds and VI's tell me to get on a fixed rates are rising. They will rise but even a base rate back to 3% will give me a better rate than i could have fixed at a few years ago. And if you can get 5 year fixes now around 3% that tells me the banks dont think rates are going that high for the rest of this decade.

M

Only time I had a fixed rate was 10% back in the 1990s. I paid for that when the UK left the ERM and rates nearly halved. BoE and government won't raise rates unless they want a million homeless. Most I can see them edging up is by 2% in next four or five years. Over that time span variable rates will more than pay for themselves.

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