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mercenarul

Is A 10 Year Fixed Rate Mortgage A Good Idea?

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I am being reluctently forced into buying a house (FTB). I would like to know peoples views on where intrest rates are going as I have seen a very attractive 10 year fixed rate mortgage, where the get out early clause that is managable.

I do not see a HPC for at least another 2-3 years and I will be buying well below my borrowing limit. My criteria for a house is a crap 2 bed semi on a large section (for possible extending in the future) in a bedfordshire village. If houses go down in value, I am not too worried as I will only be wasting inherited money. It should not put me in NE and the I/O part of the mortgage will be slightly cheaper than rent, although the repayment part will be more, but still very affordable.

I am just not sure which type of mortgage to go for, as being a tight HPC'er I dont want to be paying more than other with the same mortgage.

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Look at the interest rate futures: http://www.futuresource.com/quotes/quotes.jsp?s=LSS

Feb '06 - 4.574%

Mar '06 - 4.59%

Apr '06 - 4.58%

May '06 - 4.57%

Jun '06 - 4.56%

Sep '06 - 4.55%

Dec '06 - 4.57%

Mar '07 - 4.62%

Jun '07 - 4.65%

Sep '07 - 4.67%

Dec '07 - 4.67%

Mar '08 - 4.67%

Jun '08 - 4.66%

Sep '08 - 4.65%

Dec '08 - 4.64%

Mar '09 - 4.63%

Jun '09 - 4.62%

Sep '09 - 4.61%

Dec '09 - 4.6%

Mar '10 - 4.59%

Jun '10 - 4.58%

Sep '10 - 4.58%

Dec '10 - 4.58%

Mar '11 - 4.58%

Bascially it looks like rates will stay on hold for a long time. The next change could go anywhere... have a look at a recent poll I did: http://www.housepricecrash.co.uk/forum/ind...l=interest+rate

There's no clear consensus.

Edited by Jason

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Seems to me the consensus is clear.

It's going up, but the futures market is unsure when.

Up yeah, but according to Jason's list of futures it's only going up by .08%... hardly a leap by anyones standards.

I'm not about to buy a house, but I think those 10yr fixed rate deals are excellent if you take the state of the housing market out of the equation, though beware of penalties :)

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I think the penalty fees are pretty harsh, especially considering even the most well intentioned will probably want to move out of their pokey flat with a 10 year fix after 2 years.

I think fixed mortgages can't really get much cheaper than they are now, even if interest rates lowered slightly. A 10 year 4.67% fix really is the peak of credit expansion.

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Up yeah, but according to Jason's list of futures it's only going up by .08%... hardly a leap by anyones standards.

I'm not about to buy a house, but I think those 10yr fixed rate deals are excellent if you take the state of the housing market out of the equation, though beware of penalties :)

I think 0.08% represents investers spread betting over three months or more. 0.08 * 3 = 0.24

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I am being reluctently forced into buying a house (FTB). I would like to know peoples views on where intrest rates are going as I have seen a very attractive 10 year fixed rate mortgage, where the get out early clause that is managable.

I do not see a HPC for at least another 2-3 years and I will be buying well below my borrowing limit. My criteria for a house is a crap 2 bed semi on a large section (for possible extending in the future) in a bedfordshire village. If houses go down in value, I am not too worried as I will only be wasting inherited money. It should not put me in NE and the I/O part of the mortgage will be slightly cheaper than rent, although the repayment part will be more, but still very affordable.

I am just not sure which type of mortgage to go for, as being a tight HPC'er I dont want to be paying more than other with the same mortgage.

My feeling is that the 10 year fixes are good value right now, as interest rates are very likely to go up. It's the cost of changing the mortgage that worries me. What are the get out fees, interest rate etc?

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I think 0.08% represents investers spread betting over three months or more. 0.08 * 3 = 0.24

OK, I'm fairly ignorant as to the meaning of the figures, but if I was going to bet on the figure in 10 years time I wouldn't base it purely on where things are now :). Given my (very) limited knowledge of the market I'd be more inclined to pitch it towards historical averages :o

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I'm going to go out on a bit of a limb here about where interest rates might go over the next 10 years.....

how about 0%!

seriously a Japan style liquidity trap Is possible in the next 10 years. unlikely but possible

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If you go for the 10 year fixed rate you will at least know what your repayments are and that you can afford them. Personally I'd lock in the term for as long as possible for the security

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Rates are low at the moment, from a common sense point of view, which direction do rates have the greater potential of going ? Up, or down less ????

I think money is cheap at the moment, so if you go for a 10 year fix, at least you can budget for those years and as everybody knows, 1000 pound is not worth 1000 in a few years time (inflation etc) So in real terms, your payments will come down as hopefully, you earn more money.

I personally see rates going up, but even if they went up by .5% (which is not that big a jump), your 10 year fix will be good value.

The only aspect I can see of rates going very low, is if we sign up 100% with Europe and our rates are pegged to 2%, but who knows if that'll ever happen ???

I have a 10 year fix at 4.59%, I'm happy with that, as it gives me the security I require against rising rates.

No one can predict the future, so you must make your decision based upon your requirements. Always be arguments for and against.

Good luck with the purchase.

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I think the penalty fees are pretty harsh, especially considering even the most well intentioned will probably want to move out of their pokey flat with a 10 year fix after 2 years.

I do not know if it is the same with other banks but the Nationwide 10 year mortgage only has penalty fees if you pay off the mortgage within 10 years. It does not stop you from moving if you want to and you can get another mortgage with them to cover any extra money you need. The only issue would be if you wanted to downsize within those 10 years and even then you can overpay by £500 per month.

I view a 10 year fixed mortgage a bit like an insurance policy. If the rates go up you are "insured" against the rises. You have to pay a little bit extra for this insurance but you have piece of mind.

If the rates go down then the maximum penalty with the nationwide is 5% (going down 0.5% per year), which is equivalent to only a year's worth of interest. So if the rates do fall to 0% you can always get out by paying your penalty and then insure your rate at 0% for another 10 years!

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I am being reluctently forced into buying a house (FTB).

I sympathise. Just the other day I was forced to go and withdraw my life's savings and hand them over to a complete stranger.

It sucks, but what the heck!

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It does not stop you from moving if you want to and you can get another mortgage with them to cover any extra money you need. The only issue would be if you wanted to downsize within those 10 years and even then you can overpay by £500 per month.

If you have a fixed rate deal the only way you can move is to sell and buy at the same time in a chain and transfer the mortgage to the new property. You would not have the flexibility to sell, rent for a while, then buy, which I believe is the sensible way to move house.

Friends of mine moved from England to Scotland. As the Scottish system is different they wanted to rent for a while first but they had a fixed rate. The mortgage company allowed them 3 months to buy another property in Scotland and transfer the mortgage or otherwise pay the redemption penalty.

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  • 301 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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