Interest rates - crystal ball time I guess?.
Discussion
Hi Gents,
I’ve tried to do some digging around on the various homes threads and could not find much information.
I appreciate this is coming across as crystal ball type question, however, where do people feel interest rates are heading with all this talk of inflation?. I’ve taken some time out this morning to look at mortgage rates. Nationwide are now offering sub 1% fixed for 2yrs. Currently in a 2yr tracker at 1.29%.
Cannot see myself moving for a while, I opted out not get involved with recent frothy fomo. However I would like to in few years. I’m apprehensive of long term fixes as I have just come off a 5 year fix.
Good day to you all.
I’ve tried to do some digging around on the various homes threads and could not find much information.
I appreciate this is coming across as crystal ball type question, however, where do people feel interest rates are heading with all this talk of inflation?. I’ve taken some time out this morning to look at mortgage rates. Nationwide are now offering sub 1% fixed for 2yrs. Currently in a 2yr tracker at 1.29%.
Cannot see myself moving for a while, I opted out not get involved with recent frothy fomo. However I would like to in few years. I’m apprehensive of long term fixes as I have just come off a 5 year fix.
Good day to you all.
Ari said:
If they push interest rates up, huge swathes of society are just going to collapse financially - so many people mortgaged to the hilt!
I can't see the government allowing it
This, I can see a token negative 0.1% rate as soon as the housing market looks like it might be slowing down again.I can't see the government allowing it
Plus it will put off people from hording money and spend it instead.
Debt is the new being rich.
What’s the problem with a 5 year fix, can’t you just port it if you want to move?
We’re still pumping stimulus into markets so if inflation carry’s on rising past this ‘transitory’ period first they will reign in the liquidity before raising rates. But they’re only going in one direction.
Have you ever been able to get money so cheap?
We’re still pumping stimulus into markets so if inflation carry’s on rising past this ‘transitory’ period first they will reign in the liquidity before raising rates. But they’re only going in one direction.
Have you ever been able to get money so cheap?
Ari said:
If they push interest rates up, huge swathes of society are just going to collapse financially - so many people mortgaged to the hilt!
I can't see the government allowing it
People or the government? What happens to govt debt servicing cost IF rates increase? And where does that debt servicing cost come from?I can't see the government allowing it
QE ALSO allows you to pull money back out the system (its not supposed to be one way or the monetary financing view many have), before hitting the raise button. It acts as a leverage break (although it might increase the bank spread so you pay more for credit)...
What is your LTV now versus in 2 years time? I appreciate the value of the property might be +/- in that period but assuming prices remain stagnant but your repayments remain as they are? If you fall into a lower LTV bracket at some stage <5 years, might be worth tracking the remortgage date to roughly align to take advantage of better rates.
But yes, crystal ball.
But yes, crystal ball.
Ari said:
If they push interest rates up, huge swathes of society are just going to collapse financially - so many people mortgaged to the hilt!
I can't see the government allowing it
Although the government doesn't set interest rates and the simplistic alternative is high inflation.I can't see the government allowing it
Shnozz said:
What is your LTV now versus in 2 years time? I appreciate the value of the property might be +/- in that period but assuming prices remain stagnant but your repayments remain as they are? If you fall into a lower LTV bracket at some stage <5 years, might be worth tracking the remortgage date to roughly align to take advantage of better rates.
But yes, crystal ball.
Thank you Snozz. I’ve just carried out a rough projection as you suggest. I should just tick under the <50% LTV in two years. Currently 57% LTV at the moment if I go fixed. But yes, crystal ball.
RizzoTheRat said:
Look at what the banks are offering for longer term mortgages to get an idea of the way they think it's going to. I'm in the process of sorting a mortgage here (NL), and hopefully it'll be at 1.14% for 10 year fixed, so the bank clearly don't think the rates are going to go up.
Before the UK posters get too excited, ECB is -0.5% (Germany can borrow @ 0% out to 30 years).I will be in same position in the not too distant. Currently on 1.26%, under 70% LTV - just wondering as to whether its worth a punt at 5 year and then hope if I want to borrow more at some point Natwest agree to take me with them. I bank with them so figure if anyone is going to offer me a mortgage it will be them, so 5 year seems sensible...
okgo said:
hope if I want to borrow more at some point Natwest agree to take me with them
This is the bit that worries me. 5x multiples on basic income / credit for bonuses have become "normal" but could go away and create a generation of "mortgage prisoners" like the self cert crowd post 2007.
NickCQ said:
This is the bit that worries me. 5x multiples on basic income / credit for bonuses have become "normal" but could go away and create a generation of "mortgage prisoners" like the self cert crowd post 2007.
This is to an extent why I like 2 years, anyone can wait that long to look for something else, then the problem of being stuck with your current lender to see whether they fancy taking you with on a larger borrowing vs the entire market is somewhat less of a problem. 5 years is that bit too long for me not to think I 'might' do something in that timeframe and I have borrowed enough that even a few % is a bitter pill, along with all the other bitter pills that exist when spending a lot on a property (stamp, selling fee's etc).
Just looked and can get .94% for 2 year fixed via TSB...
5 year swap rates are at 0.7% vs 0.25% a year ago (taken off a random page on the interweb).
This would suggest the market is pricing in a modest rate rise.
Banks, or rather, mortgage lenders typically fund themselves on a floating ie LIBOR/SONIA basis.
Therefore when lending to customers on a fixed rate basis they expose themselves to interest rate risk.
They will manage this by entering into interest rate swaps in the market. The price of these swaps will then determine the fixed rate they can offer on new lending.
So, my guess would be that 5 year fixed rate mortgages might start edging upwards.
On the other hand, lenders may decide to try and increase their market share in which case the swap rate market increase will be absorbed into bank profit margins.
This would suggest the market is pricing in a modest rate rise.
Banks, or rather, mortgage lenders typically fund themselves on a floating ie LIBOR/SONIA basis.
Therefore when lending to customers on a fixed rate basis they expose themselves to interest rate risk.
They will manage this by entering into interest rate swaps in the market. The price of these swaps will then determine the fixed rate they can offer on new lending.
So, my guess would be that 5 year fixed rate mortgages might start edging upwards.
On the other hand, lenders may decide to try and increase their market share in which case the swap rate market increase will be absorbed into bank profit margins.
okgo said:
This is to an extent why I like 2 years, anyone can wait that long to look for something else, then the problem of being stuck with your current lender to see whether they fancy taking you with on a larger borrowing vs the entire market is somewhat less of a problem.
5 years is that bit too long for me not to think I 'might' do something in that timeframe and I have borrowed enough that even a few % is a bitter pill, along with all the other bitter pills that exist when spending a lot on a property (stamp, selling fee's etc).
Just looked and can get .94% for 2 year fixed via TSB...
Is that .94% with a fee? I am remortgaging at the moment, and looking at a fee-free 1.14% fixed for 2 yrs. I have always done 5yr fixes but considering 2yr this time.5 years is that bit too long for me not to think I 'might' do something in that timeframe and I have borrowed enough that even a few % is a bitter pill, along with all the other bitter pills that exist when spending a lot on a property (stamp, selling fee's etc).
Just looked and can get .94% for 2 year fixed via TSB...
bmwmike said:
okgo said:
This is to an extent why I like 2 years, anyone can wait that long to look for something else, then the problem of being stuck with your current lender to see whether they fancy taking you with on a larger borrowing vs the entire market is somewhat less of a problem.
5 years is that bit too long for me not to think I 'might' do something in that timeframe and I have borrowed enough that even a few % is a bitter pill, along with all the other bitter pills that exist when spending a lot on a property (stamp, selling fee's etc).
Just looked and can get .94% for 2 year fixed via TSB...
Is that .94% with a fee? I am remortgaging at the moment, and looking at a fee-free 1.14% fixed for 2 yrs. I have always done 5yr fixes but considering 2yr this time.5 years is that bit too long for me not to think I 'might' do something in that timeframe and I have borrowed enough that even a few % is a bitter pill, along with all the other bitter pills that exist when spending a lot on a property (stamp, selling fee's etc).
Just looked and can get .94% for 2 year fixed via TSB...
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