Mortgage fix

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  • shirley_basso
    shirley_basso Posts: 6,195
    Nice one. That's hopefully not going to be noticable in the grand scheme of things. I am one of those idiots who fixed for 2y, 1 year ago expecting my house to go up and prices to stay the same. I am in for a very rough ride come March.
  • morstar
    morstar Posts: 6,190
    shirley_basso said:

    Nice one. That's hopefully not going to be noticable in the grand scheme of things. I am one of those idiots who fixed for 2y, 1 year ago expecting my house to go up and prices to stay the same. I am in for a very rough ride come March.

    Ouch. Although, if you know any Tory MPs personally, I’m sure whatever government support is delivered will be specifically targeted at you.

    Hopefully may not be too bad by then. Longer deals currently offer better rates than shorter ones so the market obviously still feels things will reduce after the peak rather than settle high.

    Personally, I went for a known payment and aim to clear as much as possible during the term.
  • joeyhalloran
    joeyhalloran Posts: 1,077
    Interesting thread, we're thankfully fixed until Jan 26 but if we have to renew at current rates that's going to hurt out take home for the month. Not overpaying currently but instead putting extra money each month in to fixed term savings accounts that are ear-marked for a lump sum to bring the regular payments down.
  • wallace_and_gromit
    wallace_and_gromit Posts: 3,070
    joeyhalloran said:

    Not overpaying currently but instead putting extra money each month in to fixed term savings accounts that are ear-marked for a lump sum to bring the regular payments down.

    Is the rate on your savings high enough to make that a good deal?

    A few years ago when savings rates were 0.1%, my mortgage was fixed at 4% (5 year deal) so overpaying was the best way to generate "risk free" returns by a country mile. Grossing up for tax, that was equivalent to earning over 6% headline interest rate on savings. (My mortgage at the time reset the interest bearing balance every day, so there was immediate benefit from overpayments.)

  • joeyhalloran
    joeyhalloran Posts: 1,077
    mortgage is at 1.7% and savings are currently around 5%
  • surrey_commuter
    surrey_commuter Posts: 18,866
    joeyhalloran said:

    mortgage is at 1.7% and savings are currently around 5%

    Happy days you are buying money
  • pangolin
    pangolin Posts: 6,317
    edited June 2023
    joeyhalloran said:

    Interesting thread, we're thankfully fixed until Jan 26 but if we have to renew at current rates that's going to hurt out take home for the month. Not overpaying currently but instead putting extra money each month in to fixed term savings accounts that are ear-marked for a lump sum to bring the regular payments down.

    Thanks for the reminder, ours is fixed (only until July next year) but our savings are finally earning more than the 2% mortgage so I've switched from overpaying to paying into savings.
    - Genesis Croix de Fer
    - Dolan Tuono
  • verylonglegs
    verylonglegs Posts: 3,955
    Says a lot that a work colleague who's mortgage increased by £200 a month last December now feels like he got a result.
  • pep.fermi
    pep.fermi Posts: 344
    1.91%, took out 2018, fix 20yr.
    My investment (or is it savings?) averaged 6% pa, actually my expected average, so good that I made only very minimum overpayment.
  • focuszing723
    focuszing723 Posts: 7,203
    pep.fermi said:

    1.91%, took out 2018, fix 20yr.
    My investment (or is it savings?) averaged 6% pa, actually my expected average, so good that I made only very minimum overpayment.

    Insanity, no wonder Homes turned into properties.
  • rjsterry
    rjsterry Posts: 27,699
    Probably seemed expensive at the time.
    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
    Pinnacle Monzonite

    Part of the anti-growth coalition
  • focuszing723
    focuszing723 Posts: 7,203
    How can that situation be tenable for banks now? Not to mention the new norm of cars on the drip.
  • morstar
    morstar Posts: 6,190
    focuszing723 said:

    How can that situation be tenable for banks now? Not to mention the new norm of cars on the drip.

    But the banks still have a spread that benefits them in far more cases than it costs.

    I.e. savings rates at any given moment are always lower than offered borrowing rates.

    Unless there is a potential liquidity risk, it’s just a short term blip in most cases (which will also be countered by a positive blip when it moves the other direction)

    Although 20 years at 1.7% seems a very good deal.
  • joeyhalloran
    joeyhalloran Posts: 1,077
    Given most banks posted record profit I'm guessing they're covering these longer loans by not passing on savings rates. Though savings are now reasonable they're haven't grown at the same rate mortgage payments have.

    I'm also guessing there are very few people with as good a deal as that.
  • rick_chasey
    rick_chasey Posts: 72,738
    edited June 2023
    joeyhalloran said:

    Given most banks posted record profit I'm guessing they're covering these longer loans by not passing on savings rates. Though savings are now reasonable they're haven't grown at the same rate mortgage payments have.

    I'm also guessing there are very few people with as good a deal as that.

    Apart from the 3 that fell over obviously.

    It’s not all that for banks.
    _
  • shirley_basso
    shirley_basso Posts: 6,195
    They didn't fall over due to poor net interest margin
  • rick_chasey
    rick_chasey Posts: 72,738
    shirley_basso said:

    They didn't fall over due to poor net interest margin

    Certainly didn't help CS.
    _
  • surrey_commuter
    surrey_commuter Posts: 18,866
    focuszing723 said:

    How can that situation be tenable for banks now? Not to mention the new norm of cars on the drip.

    For a fix deal the lender secures (ie borrows) money from elsewhere and then lends it on at a higher rate.
  • surrey_commuter
    surrey_commuter Posts: 18,866
    pep.fermi said:

    1.91%, took out 2018, fix 20yr.
    My investment (or is it savings?) averaged 6% pa, actually my expected average, so good that I made only very minimum overpayment.

    Congratulations!! I did not know that such a thing even existed.

    What does the ERC look like on that?
  • Dorset_Boy
    Dorset_Boy Posts: 6,935
    pep.fermi said:

    1.91%, took out 2018, fix 20yr.
    My investment (or is it savings?) averaged 6% pa, actually my expected average, so good that I made only very minimum overpayment.

    Am I right in thinking you're in Germany?

    20 year fixes have been normal on the continent. will have been really sensible from 2010 to 2022.
    Probably not so good now, and weren't attractive pre-2008.

    Brits don't like to tie themselves up for any length of time, hence the prevalence of 2 year fixes. Even 5 year fixes haven't been all that popular in comparison.
  • Jezyboy
    Jezyboy Posts: 2,927
    Are such long fixes problematic for central banks, who like to think they can control inflation with interest rate changes?
  • joeyhalloran
    joeyhalloran Posts: 1,077
    Dorset_Boy said:

    pep.fermi said:

    1.91%, took out 2018, fix 20yr.
    My investment (or is it savings?) averaged 6% pa, actually my expected average, so good that I made only very minimum overpayment.

    Am I right in thinking you're in Germany?

    20 year fixes have been normal on the continent. will have been really sensible from 2010 to 2022.
    Probably not so good now, and weren't attractive pre-2008.

    Brits don't like to tie themselves up for any length of time, hence the prevalence of 2 year fixes. Even 5 year fixes haven't been all that popular in comparison.
    I keep hearing this and I don't get it personally. I've frequently gone for longer mortgage fixes as then I know what I am paying for longer, it helps budget everything longer term. It helped us out this time as we got a 5 yr fix in 2021. I understand for first time buyers or people that are overly-leveraged that they go for whichever is cheaper though.
  • Stevo_666
    Stevo_666 Posts: 58,568
    Dorset_Boy said:

    pep.fermi said:

    1.91%, took out 2018, fix 20yr.
    My investment (or is it savings?) averaged 6% pa, actually my expected average, so good that I made only very minimum overpayment.

    Am I right in thinking you're in Germany?

    20 year fixes have been normal on the continent. will have been really sensible from 2010 to 2022.
    Probably not so good now, and weren't attractive pre-2008.

    Brits don't like to tie themselves up for any length of time, hence the prevalence of 2 year fixes. Even 5 year fixes haven't been all that popular in comparison.
    I got a 5 year fix in late 2021, which I wanted as it gave some certainty, but with hindsight was a spot of luck.
    "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]
  • surrey_commuter
    surrey_commuter Posts: 18,866
    Jezyboy said:

    Are such long fixes problematic for central banks, who like to think they can control inflation with interest rate changes?

    mortgages are not the only thing impacted by BofE raises.The are far more 2-5years fixes than there were pre GFC so there is an argument that the Bank should pause for breath and wait for the full impact to be felt of the rises so far.

    This will not happen a they will have shat themselves over yesterday's inflation figures
  • Dorset_Boy
    Dorset_Boy Posts: 6,935
    surrey_commuter said:

    Jezyboy said:

    Are such long fixes problematic for central banks, who like to think they can control inflation with interest rate changes?

    mortgages are not the only thing impacted by BofE raises.The are far more 2-5years fixes than there were pre GFC so there is an argument that the Bank should pause for breath and wait for the full impact to be felt of the rises so far.

    This will not happen a they will have shat themselves over yesterday's inflation figures
    I agree, the BoE should sit tight for at least 2 months and let the rises over the last year start to take full effect.
    But they won't.
  • Pross
    Pross Posts: 40,593
    It all smacks a bit of panic and having no other tools but a hammer. If the Tories then cave and bring in some kind of assistance it would certainly become farcical. I wonder what impact it would have on the markets if the expected rate rise doesn't happen?
  • pangolin
    pangolin Posts: 6,317
    Pross said:

    It all smacks a bit of panic and having no other tools but a hammer. If the Tories then cave and bring in some kind of assistance it would certainly become farcical. I wonder what impact it would have on the markets if the expected rate rise doesn't happen?

    We're not going to find out
    - Genesis Croix de Fer
    - Dolan Tuono
  • Dorset_Boy
    Dorset_Boy Posts: 6,935
    5% base rate - they've panicked.
  • Dorset_Boy
    Dorset_Boy Posts: 6,935
    From the BBC website:
    Bank notes rising wages and inflation in services sector
    Daniel Thomas

    Reporting from the Bank of England

    When the Bank makes decisions to change interest rates, it also provides its reasons for them.

    Its Monetary Policy Committee (MPC), which has just set the interest rate, says that inflation in the services sector has remained persistently high, while wages are growing faster than it had predicted back in May.

    It added that the impact of “domestic price and wage developments… were likely to take longer to unwind than they did to emerge”.

    In a letter to Chancellor Jeremy Hunt, the Bank’s Governor Andrew Bailey said that overall inflation is still set to fall “significantly” during the course of the year as energy prices come down.

    But he added that the Bank would continue to monitor inflation closely, and would further tighten monetary policy if there “were evidence of more persistent pressures”.

    So if inflation is still set to fall significantly, why did they need to raise the base rate by 0.5%?
  • Jezyboy
    Jezyboy Posts: 2,927
    Go to be seen to be doing something, or they don't actually think inflation will go down as much as they are saying?

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