Have I missed the thread where all of us on fixed term mortgages feel a bit sick?

[tatty33]

I know its useless to moan.. and I know I'm lucky to have a home, but my God my stomach keeps going into knots when I thing about what we fixed on compared to interest rate now

Pointless rant over, as you were...

JillJ72, your situation is one of the reasons that I am considering a long term fix. I know deflation is the issue at the moment but things are so uncertain that nothing that happens now would surprise me and I don't rule out inflation becoming an issue again in a year or two and interest rates shooting back up. I don't want to be stuck on the SVR with a LTV that means I can't get a decent deal.

Jill, that would be our situation too. Don't know if anyone else would actually give us a mortgage... we'll see in July I guess...

I would start asking questions now! We were looking to fix again, although at the present time I understand the pros and cons of doing/not doing so, but it was taking the longer term view, 1 year, 2 years, etc. I agree a correction was needed in the market, but it's now put what were safe borrowers into the risk category, which is a shame. I think banks taking a holistic view of their borrower would be helpful, but will that happen...? Doubtful. Something has got to give on this lending/borrowing stalemate though.

Och, shame that Winehouse was wrong....
never mind...

Also, our £ has been taking a battering recently, and traditionally the response to that has been to raise interest rates...17% anyone?!

Those who are fixed might feel hard done by now - but in a year or 2 you'll possibly be counting your lucky stars.

yes, I think so, too..because if it is as low as it pretty much can go the only way is up....

£ is taking a battering because UK economy is in trouble, your gov have been issuing more debt, and especially because you have been printing money. That didn't work too well for Zimbabwe, and it is not likely to work too well for the UK.

"traditionally the response to that has been to raise interest rates..."

With all due respect, that is not a 'traditional' response at all, because sometimes (like now) it is actually in the interest of a country for its currency to decline in value.

Even Gordon Brown can't be so stupid as to push for higher interest rates anytime soon. The traditional response to an economic downturn is to lower interest rates and keep them low - encourage spending (rather than saving), encourage investments, etc.

Interest rates will only start to rise when inflation shoots up, which is not happening anytime soon. Retail price index is under 1%, down from 5% in September - so inflation is worryingly low.

"if it is as low as it pretty much can go the only way is up..."

Yes, but don't hold your breath. Japan couldn't raise interest rates from 0% for six years.

I do agree...not that I know much...because I mean UK is such an expensive country to live in, and all that...and certainly houseprices were beyond anything they should have been if you consider value for money ...
I do think that mortgage companies made it really to asy to over extend your finances...we had been offered so many mortgages which, realistically we could never have afforded anyway...
we moved into a down area, that could only improve and has done so (I think Corby is one of the very few places where houseprices have actually not sunk, but are still higher than they were 3 years ago when we bought)....so, I am hoping that really we did well anyway...because, we are not planning to sell anytime soon. Because whilst prices have not gone down, there are obviously not that many people buying neither...

like I said our mortgage is fixed for 5 years (well 4 1/2 years left)....so, to us nothing makes a difference , well...mostly nothing but redundency...but dh is now in a sector where that hopefully wouldn't happen to him and also does TA and has an Army Pension...so fingers crossed...

what I meant was is, that once it is down it can't go any lower and then the only way is up...but yeah, it may take some time...

"With all due respect, that is not a 'traditional' response at all, because sometimes (like now) it is actually in the interest of a country for its currency to decline in value.

No its not"

Would you like to enlighten me on this? There are advantages and disadvantages to having currency at low and high levels.

"Interest rates will only start to rise when inflation shoots up, which is not happening anytime soon. Retail price index is under 1%, down from 5% in September - so inflation is worryingly low.

RPI is a lie"

To some extent yes, but CPI is more of a lie. CPI does not include mortgage costs, therefore it hides any change in house prices . Government found this very convenient through the inflationary boom we have just had through being able to refer laughably to 'stable prices'. Any measure of inflation is a lie, purely because my rate will be different to yours.

Just in case anyone is interested, the reason why interest rates hit 15% in the last recession was because the pound was being propped up in the ERM at an overvalued level. The purpose of this was to reduce inflation, which was at a very high level. Now the exchange rate is floating, there is no need to do this. Interest rates are not going to go up significantly in the near future - the brief of the bank of England is to fix inflation, while this is dropping (particularly if CPI hits 2%) then they will not be raised.

Not being an economist I am not going to attempt to comment on the upward or downward progression of interest rates - I fixed under a year ago for 5 yrs at 4.99% which seemed favourable at the time we can afford the repayments.

I feel faintly nauseous at the low rates those on variable mortgages are paying but I am well aware that if I tried to change mortgages now I wouldn't be getting a favourable interest rate anyway as they are reserved for those with 60% equity which we do not have. And the costs of early repayment on a mortgage of our size is very high.

So we have paid for certainty, which, as a risk averse couple, is better for us (and dh's blood pressure!).

Anyone interested in the history read this www.bized.co.uk/dataserv/chron/kf80.htm

I found when sorting out my father's papers after he died last year a 1977/1978 budget summary. Fascinating. Tax rates nearly up to 90%, high inflation etc etc. Wasn't worth saving and tax on savings was high. People started leaving the country.

I am uniquely lucky at present because my husband fleeced me financially on the divorce mortgage over a million, no savings. I think the interest rate I pay at present is 3.5%, a lot better than it has been.

we have an endowment and have to make up £16,000 havent a clue what to do

Don't know who possible this is, but can you swap to a partial repayment mortgage? We started with an endowment (thanks to us being young/naive and the broker dishonest/incompetent), swapped to a partial repayment which lenders were happy for us to do because of the equity we have in the house. That way we can also overpay but retain the protection that's tied into the endowment.

i'll have to look into a partial repayment mortgage, didn't realise you could get them. swapping to a complete repayment would almost double our mortgage and we can't afford that until i work full time again.

must find a financial advisor.

morethan1 - Yes, lower currency value is sometimes in a country's interest. China, for example, has been keeping the value of its currency low vs USD for quite a few years for the obvious reason that it benefits from US demand on its exports. Lower Yuan means cheaper Chinese products.

UK will be printing money printing money, so expect value of GBP to stay low for a while to come.

"RPI is a lie"

Not really. It is an imperfect index, but nonetheless a useful one.

"And don't proffer mortgage advice unless you have a vague clue about how mortgages work..sheesh"

This is actually a subject I know a bit about, having studied it and worked in related fields for about a decade.

I'm not giving mortgage advice, btw, but clarifying an economic concept.

we took out a fixed 5.99% just before all the rates started going down ...i just don't think about it.