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mobeyone

Please Please Tell Me This Is Not True..

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http://news.sky.com/skynews/article/0,,30400-1280373,00.html

If this the case and the bubble does burst....

...about IRs being at the peak or more people going for VR mortgages?

A few weeks ago I was convinced IRs would be hiked to 6% before christmas, but now I'm not so sure based on inflation at 1.9% (although that maybe be fiddled a little)

LIBOR rates have gone higher though in the last couple of days so who knows

http://www.swap-rates.com/UKSwap_extended.html

edit: typo and link

Edited by DoctorJ

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This is bad news. One of the consequences of a 'freak' CPI figure. With sterling dropping against other currencies and food prices just about to accelerate, this could prove to be a huge mistake for new homeowners.

I can't bear to look.

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This is bad news. One of the consequences of a 'freak' CPI figure. With sterling dropping against other currencies and food prices just about to accelerate, this could prove to be a huge mistake for new homeowners.

I can't bear to look.

They are talking about discounted variable rates.

Whatever happens to rates, borrowers will face a payment shock in two years when they come off the discount. If prices have fallen or credit has tightened in the interim, they will be locked into the undiscounted variable rate. If things do slide, all teaser rates are de facto 2 and 28s.

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The article says that this is the first time VR mortgages have overtaken fixed rates since last OCTOBER and that this because people believe rates have peaked...well, from my recollection back in October interest rate rises looked pretty likely. If VR mortgages accounted for a larger % than fixed rates back then can we conclude that people thought that IRs had peaked last October??? I don't think you can definitely conclude what people think of future rates from this.

It may be that the fixed rate deals look expensive now versus VR because they have priced in more rises. People needing to maximise their borrowings would therefore be attracted to cheaper deals. I have no evidence though, just a thought.

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http://news.sky.com/skynews/article/0,,30400-1280373,00.html

If this the case and the bubble does burst....

Financially, it could be a sound decision between two. However, it is still a decision to play Russian Roulette in a new way.

Personally, if I was FORCED to get a mortgage (e.g. via ultimatum from a partner) I'd go for an offset and would be overpaying like mad and cutting off on all necessities now, before the sh*t hit and economy is over and out.

Edited by refusnik

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It may be that the fixed rate deals look expensive now versus VR because they have priced in more rises. People needing to maximise their borrowings would therefore be attracted to cheaper deals. I have no evidence though, just a thought.

good point - more often than not people will go for the cheapest option at the time. The sheeple may believe, due to VI spin, that this is the IR cycle peak but nobody knows - not even us ;)

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Bear in mind it isn't just cheap credit that has fuelled HPI, it is easy credit Tighter lending practices alone will have a significant effect.

As for IRs having peaked - plenty of inflation around the corner (food, oil, China, weaker Sterling) - we'll see

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http://news.sky.com/skynews/article/0,,30400-1280373,00.html

If this the case and the bubble does burst....

Variable rate mortgages accounted for 55% of loans taken out during July, the first time they have overtaken fixed rate mortgages in popularity since October last year, according to Hamptons International Mortgages.

The CML said last month 80% of mortgages are now fixed, this crap by Hamptons is referring to internation mortages by my guess as their name suggests and so is very misleading, sloppy reporting.

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good point - more often than not people will go for the cheapest option at the time. The sheeple may believe, due to VI spin, that this is the IR cycle peak but nobody knows - not even us ;)

Most will know only what the mortgage person tells them. All they are interested in is 'how much is it a month?' Very few even think a month ahead never mind years. Ask most people what compound interest is - haven't got a clue!

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The whole thing is nonsense. Back in those distant times - when was it - last July - all of a few weeks ago - the market rout had not happened - and everyone was still expecting rates to rise - everyone was being told to get fixed rate mortgages blah blah.

Now there is an air of panic in the air - I can't believe anyone is taking out bog standard variable rate mortgages at the moment.

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The article says that this is the first time VR mortgages have overtaken fixed rates since last OCTOBER and that this because people believe rates have peaked...well, from my recollection back in October interest rate rises looked pretty likely. If VR mortgages accounted for a larger % than fixed rates back then can we conclude that people thought that IRs had peaked last October??? I don't think you can definitely conclude what people think of future rates from this.

It may be that the fixed rate deals look expensive now versus VR because they have priced in more rises. People needing to maximise their borrowings would therefore be attracted to cheaper deals. I have no evidence though, just a thought.

Agreed and what I am thinking... I cannot help but think this is lulling people into a false sense of security in a way..

A report I came across at the turn of the year expects IR to go to 6.0 if not over by the end of the current fiscal year so I do still see another rise in the pipeline.

This reminds me of the energy market and how BG started offering similar deals on the back of spin claimning to benefit the masses cheaper deals until 2005 etc... what people did not know was that analysts had already began to plan on introducing price increases over a 1 year period to fend off rising costs of gas... but they still underestimated this hence further increases... Get the money in on a lightly higher rate and then push the rate up even more.. and when customers came off thier fixed deal... oops..

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... this crap by Hamptons is referring to internation mortages by my guess as their name suggests and so is very misleading, sloppy reporting.

That might account for some of it. Also bear in mind Hamptons are not a mid market agent. They turn their noses up at anything less than about £500k. Go into one of their offices with a bog standard three bed semi to sell and they will ask you to leave.

Another factor is the BTL mort they are currently offering on a rate of 4.99% (variable)

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Most will know only what the mortgage person tells them. All they are interested in is 'how much is it a month?' Very few even think a month ahead never mind years. Ask most people what compound interest is - haven't got a clue!

Ha ha! Totally agree and we are all like that to some extent. It is shocking to see how easily people are adding or dropping 20-50 grand on £500K "value" asset.

Somebody has to earn these £50K and it is a few years of someone's life is changing hands.

We all know how £5 in coins look like. How many can visualise £500,000?

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I think that it is possible the sheeple are being very sensible. There are very high redemption fees on fixed rate mortgages which reduce your selling flexibility. If you see prices going up in the face of gravity, you want to have some of the HPI gravy, but not be stuck with it all over your face.

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