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Medium/long Term Interest Rates


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Morning All. First post here but been an onlooker for many weeks now.

My question to all is around the subject of Long(er) term interest rates. I am about to remortgage my house and the concensus opinion on the immediate direction of interest rates is downwards, by at least 0.5% accorning to many. My personal belief is along these liens also, however , with the exorbitant 'fees' for remortgages now it is sensible if possible to try to take a longer punt on interest rates. eg. 25 year mortgage with 12 x 2yr deals at 2 k each = 24k. Howeve if you take 5 x 5yr deals only 10k. That extra 14k is a fair whack. So with this in mind I am loking to pick now for at least 3 years.

I am pretty much with you guys on the belief that inflation is getting/already out of hand. If however, the govt leave the key indicators out of the measure, will they be alloweed to get away with keep ing IRs low?

I suppose the easiest way to do this is for people to give their best est. as to IRs for the year end of the next few years.

My current thinking is to take a nice 3 year tracker ive been offered but my main worry is after this first round of pacifying IR cuts, how much may IRs go up.

And yes I know its a bit of a guessing game but the average answer from a guessing game might contain some accuracy

I thank you

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No takers?

Well heres my guess

>2008 - 4.75%

>2009 - 5.25%

>2010 - 5.75%+

Well, future are:

This is if you were to take a mortgage now expiring at the end of the years listed below:

2008 5.26%

2009 4.94%

2010 4.90%

So, generally markets are expecting rates to fall going forward, however there is a serious threat from inflation also a serious risk of deflation. Take your pic which side you want to join.

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Well, future are:

This is if you were to take a mortgage now expiring at the end of the years listed below:

2008 5.26%

2009 4.94%

2010 4.90%

So, generally markets are expecting rates to fall going forward, however there is a serious threat from inflation also a serious risk of deflation. Take your pic which side you want to join.

did you mean 'futures' are? And if so , where do you fid this info.

I think the inflation might be underplayed. Look at the news today. Council tax up (above CPI but comveniently around RPI) and also onions (though more down to weather that a macro-economic policy).

One important thing is that the first capped rate for ages has just came on the market. Im thiking I might take that as I will benefitit from the drops and have a max ceiling also should the price of onions spiral out of control.!!!

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  • 1 year later...

I though i'd dig out my first ever post and see how things panned out.

As it happened, the fear of inflation led me to take a 3 year fix at 5.89%.

Mortgage is now about £400 a month more than it would have been on the tracker!

Did not see total financial collapse happening and ZIRP.

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I though i'd dig out my first ever post and see how things panned out.

As it happened, the fear of inflation led me to take a 3 year fix at 5.89%.

Mortgage is now about £400 a month more than it would have been on the tracker!

Did not see total financial collapse happening and ZIRP.

I was also convinced that interest rates would rise and I still am. That is to say an initial drop followed by a gradual increase to tackle inflation, high rates being maintained for 4-5 years. I fixed for 10 years at 5.59% in 2008. Come 2018 I should have 'broken the back' of the mortgaged amount. The decision was also based upon a desire to avoid the remortaging fees every 2 or 3 years (sometimes as high as £1k as the amount borrowed is v. large) and avoid having to prove income/full employment etc. every time.

So, indeed, at present rates it seems a bad move. I would have been saving very considerable sums each month; enabling overpayments [sigh] c'est la vie. However......... I am still absolutely convinced rates will rise. The triggers could be obvious, rampant price inflation [imported food & goods], increased rates in the EU & US, falling purchases of UK govt debt requiring increases in yields i.e. triggering BOE rate increases AND/OR the cost for mortgage providers acquiring funds from the international credit markets and a corresponding increase in the rates they need to charge. Either way, I guess that, even for those with 25%+ equity, UK re-mortgage rates will increase beyond the 6% level within the a 2-3 year window from now - maybe as soon as 2010 and stay 'high' for many years. What do I think 'high' will be? well, I recall mortgage rates in the range of 8%-12% during the 80' & 90% and these levels may well return.

Let's see where we are in a year's time !

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