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Is It All Over For The Fixed Rate?

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Wow, encouraging further speculation and detering people from fixing.

Is it all over for the fixed rate?

http://money.independent.co.uk/property/mo...icle1184056.ece

Home buyers are turning to variable, tracker or offset mortgages, writes Stephen Pritchard

Published: 19 July 2006

Fixed-rate mortgages offer certainty. But for many home buyers the fact that the Bank of England has held interest rates steady for the last 11 months in a row makes it harder to justify paying a premium for fixing their mortgage.

That premium has also risen recently, making fixed rates look less attractive than other deals, especially tracker mortgages.

Nationwide's five-year fixed-rate mortgage recently increased from 4.69 per cent to 5.18 per cent. Few five-year fixed-rate mortgages are on offer now for less than 5.0 per cent. One of the best deals is the Britannia's, at 4.99 per cent, according to financial researchers Moneyfacts.

Why are fixed rates going up when interest rates are steady?

Lenders fund fixed-rate deals by borrowing through the money markets.

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You will also find that lenders fund their fixed rate deals with incredibly high arrangement fees. They are normally between £499 to £999. This high fee is normally added to the loan so it in effect becomes invisible till payback time. Also lenders have now increased their exit fees. Alliance & Leicester charges an eye watering £290 to move a mortgage to another lender. This is not a redempion penalty for moving the loan elsewhere within a fixed rate period. It is quite simply a rip off charge for taking your mortgage elsewhere.

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But for many home buyers the fact that the Bank of England has held interest rates steady for the last 11 months in a row makes it harder to justify paying a premium for fixing their mortgage.

What is wrong with these people, surely this is the best case ever for fixing your rate... if it's stayed steady in the past it's more likely to change in the future!

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What is wrong with these people, surely this is the best case ever for fixing your rate... if it's stayed steady in the past it's more likely to change in the future!

Sssh! You're right, but these muppets will be the first to get really hurt when rates start to rise again at the end of the year!

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What is wrong with these people, surely this is the best case ever for fixing your rate... if it's stayed steady in the past it's more likely to change in the future!

You beat me to it.

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What is wrong with these people, surely this is the best case ever for fixing your rate... if it's stayed steady in the past it's more likely to change in the future!

But, um, if you think interest rates are going to go up significantly, then house prices are going to go down, and you shouldn't be buying anyway.

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I was quite careful about getting a capped rate for my mortgage when I bought my first house over 2 years ago. I was aware interest rates had reached 15% in the early 90s. It's strange though that I didn't really consider that if rates did double that house prices would halve and I'd lose £70k! You have a different mindset when buying your first house - you may expect rates to go up and you may expect you may need to move house and want to avoid redemption penalties... but how many consider they may want to go back to renting? Not me, but that may change :)

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What is wrong with these people, surely this is the best case ever for fixing your rate... if it's stayed steady in the past it's more likely to change in the future!

..and if lenders are charging a higher premium for fixed rates its because they believe there is a higher risk of the base rate increasing in the future!

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  • 302 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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