Interest rates going forward? Quick Help needed.

[JOETHETOE]

Any thoughts guys? Just been offered to swap from my current 2 year (10 mths left) fixed at 5.7% to 1.59% above base rate 3 year.

They wrap the costs into the loan etc, I appreciate that the reason is that I am tied in for longer but assuming the base rate gets no higher than about 3% during the term I would be about £750 pcm better off which is handy with my first child on the way.

I guess what I am asking is a little bit "Crystal Ball" but where do we think rates will be in 2/3 years time.

Would be interested to hear your thoughts!

Cheers

Joe

its collared at 2% currently but apparently HBOS are going to drop this to 0.001% next week.

[BigAlinEmbra]

RBS do a nice and easily readable forecast.
http://www.rbs.com/content/economic/downloads/uk/f...

[JOETHETOE]

Thankyou for that, but its really the third year i.e 2010-2011 that I am worried about.

The other oprtion is to see out my current product (Sept 09) and fix onto what should be a decent rate?

Cheers

Its very hard call to make as its all guesstimating really

Cheers

[Somewhatfoolish]

They can't go much lower... they can get a hell of a lot higher

[JOETHETOE]

Fair comment, might just stick mine out till sept and then fix on 3.5% ish.

[scotal]

This is not financial advice, cos I dont know you or your circumstances. That said I would be very wary of signing up to a tracker atthe moment.

Personally I'd be keeping an eye on long term fixes, and see where they go over the next few months.

[JOETHETOE]

Thanks guys, I am going to hold out until September,

Edited by JOETHETOE on Monday 8th December 14:45

[Somewhatfoolish]

Only thing that worries me about holding out that long... inflation could easily raise its ugly head by July, going by past history.

Thing is, 3%ish is fk all. I'm not saying it's likely, but no reason we couldn't have 20% interest rates by this time next year. But then again, I am very paranoid.

[scotal]

Somewhatfoolish said:

Only thing that worries me about holding out that long... inflation could easily raise its ugly head by July, going by past history.

Thing is, 3%ish is fk all. I'm not saying it's likely, but no reason we couldn't have 20% interest rates by this time next year. But then again, I am very paranoid.

Which is why I reocmmend keeping an eye on long term fixes (or getting your broker to do it for you). If you have to pay an ERC to get onto a really good 5 or 10 year fix then it may be worth doing simply to by some longer term rate security.

[allgonepetetong]

Somewhatfoolish said:

Only thing that worries me about holding out that long... inflation could easily raise its ugly head by July, going by past history.

Thing is, 3%ish is fk all. I'm not saying it's likely, but no reason we couldn't have 20% interest rates by this time next year. But then again, I am very paranoid.

20% interest rates would have everyone defaulting on their mortgage payments!

[Somewhatfoolish]

allgonepetetong said:

Somewhatfoolish said:

Only thing that worries me about holding out that long... inflation could easily raise its ugly head by July, going by past history.

Thing is, 3%ish is fk all. I'm not saying it's likely, but no reason we couldn't have 20% interest rates by this time next year. But then again, I am very paranoid.

20% interest rates would have everyone defaulting on their mortgage payments!

Not if the pound was worthless

[JustinP1]

Somewhatfoolish said:

allgonepetetong said:

Somewhatfoolish said:

Only thing that worries me about holding out that long... inflation could easily raise its ugly head by July, going by past history.

Thing is, 3%ish is fk all. I'm not saying it's likely, but no reason we couldn't have 20% interest rates by this time next year. But then again, I am very paranoid.

20% interest rates would have everyone defaulting on their mortgage payments!

Not if the pound was worthless

I hardly think that the banks or the Bank of England would instigate a policy which would mean 80% of homes to be in default and repossessed with no-one to buy them!

[Somewhatfoolish]

JustinP1 said:

Somewhatfoolish said:

allgonepetetong said:

Somewhatfoolish said:

Only thing that worries me about holding out that long... inflation could easily raise its ugly head by July, going by past history.

Thing is, 3%ish is fk all. I'm not saying it's likely, but no reason we couldn't have 20% interest rates by this time next year. But then again, I am very paranoid.

20% interest rates would have everyone defaulting on their mortgage payments!

Not if the pound was worthless

I hardly think that the banks or the Bank of England would instigate a policy which would mean 80% of homes to be in default and repossessed with no-one to buy them!

Imagine you had a mortgage in Zimbabwe for 50 thousand dollars from 1980... do you really think you'd mind a massive interest rate when you're a gazillionaire?

Massive inflation would mean much higher interest rates could be tolerated by home owners.

Please note this is not a prediction of 20% interest rates, just saying that it's possible.

[Ordinary Bloke]

Take a look at the Bank of England's rates since 1964 then tell me interest rates can't go significantly higher:

http://www.bankofengland.co.uk/statistics/rates/ba...

[blackvanman]

My fix is up at the end of December (by chance not skill!) and I like the look of a 10-year fix at 4.99% as I don't particularly enjoy rooting around every 2/3 years for the best fixed rate, plus it typically costs me £1k each time.

But with rates at 2.0% and forecast to fall to 1.0% next year, is this madness?

Need £190k, c50% LTV assuming it's fallen 30% since August 2007.

I haven't seen any killer short term fixed rate deals, so the alternative I guess would be to stick it on a tracker, like HSBC's 1.64% over base.

2 years of this would "save" £3,000 but then the 10-year rate only needs to have shifted to say 5.5% by that point to wipe those savings out over the remainder of the loan.

Help! Someone who is good with money tell me what to do!

[scotal]

Black van man, you have mail.