BoE BR rate predictions - mortgage options?
Discussion
I'm on the cusp of buying somewhere, and have narrowed my choice down to two mortgage options. The choice essentially hinges on what is likely to happen to the BoE BR over the next 2-3 years. It's for a mortgage at 80% LTV.
Option 1: Post Office 3-year Fixed @ 4.15% (£995 fee)
Option 2: HSBC Lifetime Tracker @ 2.39% above BoE BR - so currently 2.89% (£399 fee)
I've been doing lots of modelling (as you do!) With the BR as it is now, the tracker is far cheaper. A BR of 1.75% (give or take a couple of quid) is the point at which the interest accrued equalises between the two options; anything above 1.75%, and the fixed option becomes cheaper.
My temptation is to go for the tracker and make overpayments (which are unlimited and unpenalised) while the BR is still low, but the risk-averse side of my nature is still concerned about larger rises. While there are no fees for repaying the tracker, if/when the rates are higher, the mortgages I can then turn to will be correspondingly more expensive, as well.
So, best bet: what's the 2-4 year outlook for the BoE BR? What would you do?
Option 1: Post Office 3-year Fixed @ 4.15% (£995 fee)
Option 2: HSBC Lifetime Tracker @ 2.39% above BoE BR - so currently 2.89% (£399 fee)
I've been doing lots of modelling (as you do!) With the BR as it is now, the tracker is far cheaper. A BR of 1.75% (give or take a couple of quid) is the point at which the interest accrued equalises between the two options; anything above 1.75%, and the fixed option becomes cheaper.
My temptation is to go for the tracker and make overpayments (which are unlimited and unpenalised) while the BR is still low, but the risk-averse side of my nature is still concerned about larger rises. While there are no fees for repaying the tracker, if/when the rates are higher, the mortgages I can then turn to will be correspondingly more expensive, as well.
So, best bet: what's the 2-4 year outlook for the BoE BR? What would you do?
Was having this chat with my IFA last week, then general concensus is fixed by May and fix for 3 years at anything under 4.5%.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
Look at First Direct.
3yr Fixed offset 3.9% but with a 75% LTR.
As for rates, they are going up and if your break even on a 3yr fixed is 1.75% then the question is will the average interest rate over the next 3 years be 1.75%?
The answer - Definitely, unequivocally YES.
Fixed all the way if you are buying soon. Get the mortgage approved as it should be valid for 6 months or so. First rate rise could be as early as next month, though unlikely. Next month's GDP, RPI figures will be interesting and the vote could see a surprise.
3yr Fixed offset 3.9% but with a 75% LTR.
As for rates, they are going up and if your break even on a 3yr fixed is 1.75% then the question is will the average interest rate over the next 3 years be 1.75%?
The answer - Definitely, unequivocally YES.
Fixed all the way if you are buying soon. Get the mortgage approved as it should be valid for 6 months or so. First rate rise could be as early as next month, though unlikely. Next month's GDP, RPI figures will be interesting and the vote could see a surprise.
fergywales said:
Was having this chat with my IFA last week, then general concensus is fixed by May and fix for 3 years at anything under 4.5%.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
Thats some pretty impressive 'projections' you have there....................I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
Sarnie said:
fergywales said:
Was having this chat with my IFA last week, then general concensus is fixed by May and fix for 3 years at anything under 4.5%.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
Thats some pretty impressive 'projections' you have there....................I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
9% not a chance by the end of next year. Current pricing is 2.5% to 2.75% which seems about right with BofE projection info. Personally, I think a peak in rates over the next 3 years of 4-5% but there are so many unknowns (oil, commodity prices, food prices, if China can take the edge off their inflation etc etc ) that projecting out that far is fooking hard.
Whoever the IFA is either doesn't know his ass from his elbow on a macro scale or he should sack off his current career and take up trading as he'd be retired in a year!
fergywales said:
Was having this chat with my IFA last week, then general concensus is fixed by May and fix for 3 years at anything under 4.5%.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
WOWI don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
I think you are way off.
Dont you see whats going on with the world?
Oil prices have hit $112 dollars
I dont think rates will be moving up as fast as they might have predicted last month due to whats going on.
auditt said:
fergywales said:
Was having this chat with my IFA last week, then general concensus is fixed by May and fix for 3 years at anything under 4.5%.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
WOWI don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
I think you are way off.
Dont you see whats going on with the world?
Oil prices have hit $112 dollars
I dont think rates will be moving up as fast as they might have predicted last month due to whats going on.
holes, everyone has one.Is the average interest rate for the last 20 years not around 5.25%? I would rather prepare for it to go over this than remain under and remain longterm.
fergywales said:
Was having this chat with my IFA last week, then general concensus is fixed by May and fix for 3 years at anything under 4.5%.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
So why only fix for 3 years if there are big rises on the way?I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
CzechItOut said:
Is there some kind of online "what if" calculator that lets you play around with your current variable rate and potential interest rates compared to fixed rates that are on offer right now?
Money Saving Expert has quite a good calculator with a range of options.fergywales said:
Was having this chat with my IFA last week, then general concensus is fixed by May and fix for 3 years at anything under 4.5%.
I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
Really!?! According to your figures it would go as follows:I don't think we will see early '90s rates, but would not be surprised to see it top out at 8/9% by end of next year.
Having seen how the voting went this month with the MPC, I would expect 0.5% to remain next month, and then 0.25% steady rise bi-monthly for the next 9 months, with 2012 starting to see monthly raising by 0.5% to about mid-year.
April 2011 - 0.75%
June 2011 - 1.00%
August 2011 - 1.25%
October 2011 - 1.50%
December 2011 - 1.75%
January 2012 - 2.25%
February 2012 - 2.75%
March 2012 - 3.25%
April 2012 - 3.75%
May 2012 - 4.25%
June 2012 - 4.75%
then after that you expect to get to 8/9% by the end of 2012?
I'm off to stock up on baked beans and dig an air raid shelter!
With all the uncertainty in the Middle East, I'd be surprised if the BoE have the balls for a rate increase for in the next few months.
I'd go Nationwide at 2.19 + BBR (70% max) which includes the option to switch onto a fixed at anytime with no penalty.
Let me know if you want any more info
I'd go Nationwide at 2.19 + BBR (70% max) which includes the option to switch onto a fixed at anytime with no penalty.
Let me know if you want any more info
hamski said:
With all the uncertainty in the Middle East, I'd be surprised if the BoE have the balls for a rate increase for in the next few months.
I'd go Nationwide at 2.19 + BBR (70% max) which includes the option to switch onto a fixed at anytime with no penalty.
Let me know if you want any more info
I think he said he was on 80% LTVI'd go Nationwide at 2.19 + BBR (70% max) which includes the option to switch onto a fixed at anytime with no penalty.
Let me know if you want any more info
mft said:
Option 1: Post Office 3-year Fixed @ 4.15% (£995 fee)
Option 2: HSBC Lifetime Tracker @ 2.39% above BoE BR - so currently 2.89% (£399 fee)
So, best bet: what's the 2-4 year outlook for the BoE BR? What would you do?
Cant predict teh rate changes, but I was set on an HSBC tracker earlier this year. They agreed in principle, but once I applied, they were not willing to lend me any money at all.Option 2: HSBC Lifetime Tracker @ 2.39% above BoE BR - so currently 2.89% (£399 fee)
So, best bet: what's the 2-4 year outlook for the BoE BR? What would you do?
I was at a 47% LTV
Tino said:
Cant predict teh rate changes, but I was set on an HSBC tracker earlier this year. They agreed in principle, but once I applied, they were not willing to lend me any money at all.
I was at a 47% LTV
Thats because they have one of the lowest acceptance rates in the market, they post market leading rates to attract the masses and then pick and choose who they actually lend to........I was at a 47% LTV
mft said:
R11ysf said:
Look at First Direct.
3yr Fixed offset 3.9% but with a 75% LTR.
I can only find one with a 4.29% fixed rate from FD?3yr Fixed offset 3.9% but with a 75% LTR.
Bing o said:
Any clever types able to model this in Excel - it would be usful to be able to plug in fees and lemding interest rates, whilst also modelling differing BOE base rates.
The problem is how you model the base rate changes.People struggle with the whole concept of AVERAGE.
The one I use is on a quarterly basis.
So Q111 is on 0.50%, Q211 0.60%, Q311 1.00% or whatever...
My attempt to share...
https://docs.google.com/viewer?a=v&pid=explore...
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