Not all lenders are cutting rates. Last month, the Woolwich – now part of Barclays – upped the cost of some of its home-loan deals by up to 0.3%, blaming the rising costs of funding.
Ray Boulger at mortgage broker John Charcol told The Sunday Times that fixed could fall as low as 3.5% from here - and sure enough a 2.99% rate is now on offer. Yet "sooner or later rates are simply going to have to rise, and rise sharply", he adds. "While convincing someone who's currently paying next to nothing to take a fixed-rate between 4% and 5% is as challenging as selling ice to Eskimos, in the long-term there's every possibility they'll be better off."
My view
I have advised many clients to reserve rates - which you can do with many lenders for up to 6 months in advance - its a case of hedging your bets because you can always pull out if the market looks like its going to carry on staying low.
Article source Money Week The full article
http://www.usefulmortgages.co.uk/
Monday, 24 August 2009
Barclays interest rate forecast
The key uncertainty ahead of this month’s Monetary Policy Committee meeting had been whether the bank would extend quantitative easing (QE) under its asset purchase programme (APP). The three month extension of the APP appears to have dampened any real prospects of a rise in bank rate during 2009, which may have been raised following last month’s decision to maintain the previous APP limit.
Barclays go on to forecast that the Bank of England base rate is likely to reach 1.75% by August next 2010
The full report
http://www.usefulmortgages.co.uk/
Barclays go on to forecast that the Bank of England base rate is likely to reach 1.75% by August next 2010
The full report
http://www.usefulmortgages.co.uk/
Monday, 10 August 2009
THE REMORTGAGE CONUNDRUM
There is a lot of confusion about the pay rates different lenders are charging. So what’s best – go for a fixed rate, a variable/tracker rate, or stick with what you’ve got?
Here are a few pointers that may help:
WILL THE BANK OF ENGLAND KEEP RATES AT 0.5%?
Got a crystal ball?!
Some commentators reckon that interest rates will creep up by 0.5% in the Spring of 2010. Others reckon that interest rates are unlikely to move until the end of 2010.
HOW MUCH MONEY DO THE LENDERS HAVE?
Lenders are rationing their money in different ways. Woolwich allocate a fixed lending sum every day, and when it’s gone that’s it for the day. Many lenders are reducing the Loan to Value they will consider. Lenders are looking much harder at affordability, lending into retirement, property values and a host of other criteria. As time goes on it is becoming harder to get a mortgage. Some of my clients who put off remortgaging a few month ago are now unable to get a new product.
REVERT RATES
When you come to the end of your current deal you will go on to a Revert Rate – the pay rate that your mortgage offer stated you will revert to.
Your Revert rate may be a tracker. Generally these are excellent value, tracking the Bank Of England base rate (0.5%) by a margin of say 2.5%. This means you might be paying as little as 3.0% if you don’t swap lenders or products
Many products have a Revert Rate that is a Standard Variable Rate (SVR). This is a rate set by each lender independently, and there is a great variation in SVR from lender to lender. Some SVR’s are as low as 2.5%, some are over 5%. To stay on the SVR or swap to a new product will therefore need careful consideration.
FIXED RATES
It’s a good idea to go for a fixed rate if:
1. You have limited income, and you can’t afford to take the risk of a interest rate rise.
2. you have a family –or are about to start one, and you would rather pay a bit more each month now to be certain that there will be no bad financial surprises in the future.
3. You are the sort of person who hates taking risks – especially when it relates to your home and mortgage.
4. You think interest are unlikely to stay this low for much longer
A recent product search listed 539 fixed rate products for a client. The pay rates ranged from 3.98% to 10.15%, and the arrangement fees ranged from £0 to over £2,500.
The cheapest fixed rates are for 2 years. 3, 4 and 5 year rates generally get more expensive. The reason is that the lenders think rates will be reasonably stable for the next 2 years, but the financial future gets much more uncertain. They don’t want to take risks by offering a cheap 5 year fixed rate and then find they lose out if interest rates rise.
TRACKER RATES
Tracker rates shadow the Bank Of England base rate (BBR) by a set margin.
2 year ago I was writing mortgages that tracked the BBR by less than 0.5% now trackers have a margin of 2.49% to 3.99%. The pay rates will therefore range from 2.99% to 4.49%. This sounds good, but you need to think of what happens if the BBR goes up again. It dropped by 1.5% in one month last year, If it rose by the same amount you would suddenly find your 2.99% mortgage was costing you 4.49% . If you are comfortable with this risk, and your crystal ball sees a few more years of a very low BBR, a tracker will be the right product for you.
RESERVING RATES
With many lenders you can reserve products up to 6 months in advance. You are at liberty to cancel at any time, although some lenders may charge a cancellation fee.
EASY ISN’T IT?
I hope this information helps – but if you have any questions or would like a professional analysis of your needs just call 0845 170 20 20 mob 07855 799 807 or email
There is a lot of confusion about the pay rates different lenders are charging. So what’s best – go for a fixed rate, a variable/tracker rate, or stick with what you’ve got?
Here are a few pointers that may help:
WILL THE BANK OF ENGLAND KEEP RATES AT 0.5%?
Got a crystal ball?!
Some commentators reckon that interest rates will creep up by 0.5% in the Spring of 2010. Others reckon that interest rates are unlikely to move until the end of 2010.
HOW MUCH MONEY DO THE LENDERS HAVE?
Lenders are rationing their money in different ways. Woolwich allocate a fixed lending sum every day, and when it’s gone that’s it for the day. Many lenders are reducing the Loan to Value they will consider. Lenders are looking much harder at affordability, lending into retirement, property values and a host of other criteria. As time goes on it is becoming harder to get a mortgage. Some of my clients who put off remortgaging a few month ago are now unable to get a new product.
REVERT RATES
When you come to the end of your current deal you will go on to a Revert Rate – the pay rate that your mortgage offer stated you will revert to.
Your Revert rate may be a tracker. Generally these are excellent value, tracking the Bank Of England base rate (0.5%) by a margin of say 2.5%. This means you might be paying as little as 3.0% if you don’t swap lenders or products
Many products have a Revert Rate that is a Standard Variable Rate (SVR). This is a rate set by each lender independently, and there is a great variation in SVR from lender to lender. Some SVR’s are as low as 2.5%, some are over 5%. To stay on the SVR or swap to a new product will therefore need careful consideration.
FIXED RATES
It’s a good idea to go for a fixed rate if:
1. You have limited income, and you can’t afford to take the risk of a interest rate rise.
2. you have a family –or are about to start one, and you would rather pay a bit more each month now to be certain that there will be no bad financial surprises in the future.
3. You are the sort of person who hates taking risks – especially when it relates to your home and mortgage.
4. You think interest are unlikely to stay this low for much longer
A recent product search listed 539 fixed rate products for a client. The pay rates ranged from 3.98% to 10.15%, and the arrangement fees ranged from £0 to over £2,500.
The cheapest fixed rates are for 2 years. 3, 4 and 5 year rates generally get more expensive. The reason is that the lenders think rates will be reasonably stable for the next 2 years, but the financial future gets much more uncertain. They don’t want to take risks by offering a cheap 5 year fixed rate and then find they lose out if interest rates rise.
TRACKER RATES
Tracker rates shadow the Bank Of England base rate (BBR) by a set margin.
2 year ago I was writing mortgages that tracked the BBR by less than 0.5% now trackers have a margin of 2.49% to 3.99%. The pay rates will therefore range from 2.99% to 4.49%. This sounds good, but you need to think of what happens if the BBR goes up again. It dropped by 1.5% in one month last year, If it rose by the same amount you would suddenly find your 2.99% mortgage was costing you 4.49% . If you are comfortable with this risk, and your crystal ball sees a few more years of a very low BBR, a tracker will be the right product for you.
RESERVING RATES
With many lenders you can reserve products up to 6 months in advance. You are at liberty to cancel at any time, although some lenders may charge a cancellation fee.
EASY ISN’T IT?
I hope this information helps – but if you have any questions or would like a professional analysis of your needs just call 0845 170 20 20 mob 07855 799 807 or email
Monday, 3 August 2009
Twitter Tips
I have started to use Twitter, and found the following info a really useful guide to Do's and Dont's
http://www.ecademy.com/node.php?id=131854
Subscribe to:
Posts (Atom)
.jpg)