Remortgage - Should i fix or not?

[Herbal]

Hi

Got a deal agreed and just need to sign it and send it back. The deal was a 5 year fixed at a rate of 5.78% with no fee. But as the rate changed was a 0.5% this deal now looks a little bad.

It needs to be signed by next week but if i dont then i will go onto the SVR which with nationwide is 6.49%.

Now should i wait to see what the lenders do with their rates after this cut as it's been said there could be even further cuts next month.

I have been on a tracker for the last 2 years but with the mess everything is in atm i thought a fixed would be better but unsure on this now.

So what would you do hold out on the svr for a few months and see what people do? Pretty sure i can hold the fixed rate deal for 90 days so if things do go into a mess i got a fall back to go on.

[DeadYankee]

If you are thinking fixed then you can't worry about rate changes here and there. I fixed mine for 10 years as i knew i could afford the payments and was willing to accept that the rates might fall. If you end up paying over the odds due to low rates then it is worth it for the overall peace of mind IMO.

[FunkyD]

At least wait a week or so - the word at work is that there might be another rate cut...

[Kryten]

How long do you have to send it back? Hopefully the new money market funding should kick in soon so new deals will be around, but remember that fixed rates often carry a big fee to apply.

Fixed rate is peace of mind. If you can afford it you should just ignore where the rate is going elsewhere after you start and be happy woth your fixed rate and peace of mind. If the rate dropped enough you could probably save the penalty of leaving your mortgage to re-mortgage again, or the same bank may offer to do it with even lower fees.

[farmroad38]

Bear in mind that fixed rate deals may not get any cheaper.

The rate at which banks lend is often linked to the interbank lending rate LIBOR, rather than the BoE rate. Normally, the two are quite close, but in the current market insanity they are very different - whilst the BoE rate went down to 4.5% on Wednesday, LIBOR went up to 6.285%.

Some banks did drop their SVR in response to the BoE cut, but others have not, and many more may not drop their long term fixes either.

[Herbal]

Thanks,

If i want this deal i need to send it back this week they need it by the 20th Oct. I can afford the rate but if i can get a better deal in a month or so i would rather wait. After i have sorted this i will ignore the rates then as it wont effect me mortgage wise.

But as a few people are saying another rate cut is on the cards then it could be worth while waiting.

But this is IF nationwide or any others bring their rates down too.

[Philc]

Go for the base rate tracker and drop option where you can decide when to fix the price of the deal at whatever the BOE base rate is.

[Herbal]

Little update -

Phoned Nationwide and they said that rates would be going up tomorrow on the tracker from 0.64% to 0.94%. If i scrap the 5 year fixed rate which is 5.78% and go for the tracker which is 0.64% i would be saving about £35pm and if they keep going down would get cheaper again.

[DeadYankee]

Yep, and if they go up it'll be more expensive. A straight choice between risk or stability

[steve_smith]

We moved our mortgage to the Nationwide a couple of weeks ago, and fixed for two years at 6.08% (completely free, no charges at all). I understand that rate isn't available anymore though.

Far better than our previous lender (Halifax). They generously offered to fix our rate at 6.49% for 3 years at the cost of only £1000, when their standard variable rate is 6.50% :) Hmmm let me think about that one...

Fixing is a bit of a gamble, but at least it allows you to budget for the next x years, knowing that at least your monthly payments won't be going up.

[belgarion_v]

I'm sure I heard an 'expert' on Radio 2 today says that they expect interest rates to fall to about 2.5%, which would be nice.

They also pointed out that they couldn't see any finance institution taking their mortgage rates anywhere near as low, you only have to look at the current situation where rates have fallen and most mortgages haven't.

Vince