How long is a piece of string etc but...are tracker mortgages still ok, not a huge risk?

[Tinker]

Have been shown a good deal which is a tracker mortgage. Monthly payments low, can pay more if want to and the £1 you pay compared to £1 paid of debt looks quite good.

So, are interest rates going to remain steady over next few years? If go up, will crawl up by 0.25% every few months or so??

Thanks

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I hope so because we planning to take out a tracker mortgage! Decided to go for it because the arrangement fee was so much lower than the best fixed rate deal we were offered. So even though the monthly payments are slightly higher, it works out cheaper overall. The base rate may go up a little bit further but not a huge amount I don't think (and our mortgage broker doesn't think so either.)

I would put tracker mortgages in roughly the same category as variable rate mortgages only insofar as the interest rates vary according to the Bank of England's interest. As contrasted with fixed rate mortgages, of course.

I think the difference between a tracker and variable is that the tracker takes into account any changes to the BoE rate immediately, whereas there is a lag time (one month or more?) with variable mortgages, good if interest rates are going up but not so good if coming down. I don't feel the difference is that significant.

I think conventional wisdom is that interest rates may hold steady or creep up a little more, but not much more. Then again, it is all crystal ball gazing.

I don't believe much in fixed rate mortgages because the interest premium for the fix is too high for such a short period of time. Prefer instead to keep refinancing a heavily discounted tracker/variable rate mortgage every 2 years or more after the discounted period runs out.

Just make sure that the discount leaves you with enough fat if interest rates do continue to climb.

I was wondering recently what on earth to do as my fixed mortgage was ending. So I took a huge risk and took out a 10 year fixed rate mortgage at 5.08% with Nationwide Anglia. I looked at past trends and decided I couldn't live with the uncertainty. If the rate goes up to 8% for instance, I would struggle to pay my mortgage. I don't know what it's going to do but I hope I have done the best thing for us. On a 100k mortgage every 1/4 rate rise is about 18.00 per month.

UCM, the 10 year fix at 5.08% sounds like a rather good deal, actually. I didn't know banks/building societies offered fixes for such a long time - thought it was around 2-3 years.

Will look into it when the discounted period for my tracker ends next year.

Is the Nationwide Anglia the Nationwide?

We're just in the process of moving and looking at a new mortgage. We were all set to go for a 2 year tracker, having always fixed before, but decided interests rates are more likely to rise over the next few years so ended up fixing it at 4.89%.

It depends on your attitude to risk I think. I found this useful in determining how we both felt about risk - luckily dh and I came out about the same.

I don't think interests rates will rise dramatically but we looked at the lowest fixed we could get and worked out how much the rates would have to rise before the tracker would cost more and it wasn't much.

Yes, it's the nationwide, think it used to be called that.

I was just about to post a link to Charcol online, they are about the best online mortgage helper. They have also been around for years so are extremely reputable. You don't have to pay them though, you can just sign up online and search.

Ah, Nationwide tracker for 2 years is the on I'm interested in

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Thanks Orinoco. Just too much choice really, feel overwhelmed. Also recommnended a Portman 3 year fix.

Also remember to ask if you will be tied to the company after whatever discounts have finished. Lots of people get stuffed by this.

Orinoco, why have these companies started charging huge fees to take out these mortgages? I paid 399.00 for this 10 year fixed which over that period isn't bad, but some are charging 500 .00 for 2 years. Is this just another way of screwing money out of us?

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