Interest Rates up 0.25%

[Man of Harveys]

Basically there is a market for money, the interest rate being the price if you like. For any given maturity (ie 2, 5, 10 years etc) there will be an interbank market price where you can either borow or lend money for that period. Put simply, join up these prices and you get a curve, usually upward sloping which is the long term yield curve. If rates are expected to rise in the future, this curve will steepen. Right now for Sterling it is pretty flat out to 20 years.

Not for the first time, big boy, you've expanded my mind - cheers.

 

[Lokki 7]

a bit like Hitch hikers Guide to the Galaxy where all the people used leaves as currency, but burned down the trees to make the currency scarce

Erm... not exactly. Although that is what Enron did to the state of California's electricity supply.

 

[aftershavedave]

Basically there is a market for money, the interest rate being the price if you like. For any given maturity (ie 2, 5, 10 years etc) there will be an interbank market price where you can either borow or lend money for that period. Put simply, join up these prices and you get a curve, usually upward sloping which is the long term yield curve. If rates are expected to rise in the future, this curve will steepen. Right now for Sterling it is pretty flat out to 20 years.

spot on

 

[Uncle Spielberg]

Is the right answer.

you can only say that at the end of the next 2 years for sure. A straight 90% re mortgage with fee added, free legals, free survey is pretty similar for fixed, tracker and discounted rates

Fixed 4.94% NWBS
Tracker 5.09% BBR + 0.09% BoS will now be 5.34%
Discount 5.09% SVR - 2% B&W will now be 5.34%

Therefore the fixed rate is looking good and you would only be better off with the tracker or discount if rates did not rise anymore and infact fell.

No one knows for sure but if people prefer the security of fixed rate payments thats up to them and they should not be made to look ill informed or silly by city people in sharp suits with too much time to read the FT

 

[El Presidente]

Still got 9months left on mine !!

Is it likely to go any higher

Probably will rise to 5.5% by the end of the year.

I am appearing on the local TV station tonight supposedly as an expert in finance.

My advice to the local citizens of Manchester is

Don't Panic

 

[Lokki 7]

if people prefer the security of fixed rate payments thats up to them and they should not be made to look ill informed or silly by city people in sharp suits with too much time to read the FT

Yeah, knowledge and facts can be very off putting when making important decisions.

 

[Uncle Spielberg]

some people predict 6% I suspect it will peak at 5.25% or 5.5%

 

[Uncle Spielberg]

I have explained the rationale for why people may want a fixed rate Lokki, some people have a cautious attitude and like to know where they are. I would personally go for a 4.69% fixed until 1/8/08 if I were buying and review matters then.

 

[Lokki 7]

some people predict 6% I suspect it will peak at 5.25% or 5.5%

So does the market, which was the original point Afters made.

 

[Uncle Spielberg]

I think you'll find Afters comment was " why on earth would someone want to fix now " which you highlighted and said " is the correct answer ", I have just given a couple of reasons why they might want to

 

[hans kraay fan club]

I have explained the rationale for why people may want a fixed rate Lokki, some people have a cautious attitude and like to know where they are. I would personally go for a 4.69% fixed until 1/8/08 if I were buying and review matters then.

I am one of those very people. We took on quite a big mortgage when when we moved three years ago, and didn't want to be too stretched, so we got a thirty year mortgage, fixed for 5 yrs, with the full intention of moving it at the end of the fixed term to something much shorter, when my salary had caught up a bit.

 

[hans kraay fan club]

I am one of those very people. We took on quite a big mortgage when when we moved three years ago, and didn't want to be too stretched, so we got a thirty year mortgage, fixed for 5 yrs, with the full intention of moving it at the end of the fixed term to something much shorter, when my salary had caught up a bit.

Though quite why I am even entertaining your views on anything financial, given what your racing tips have cost me, is beyond me!

 

[Lokki 7]

I think you'll find Afters comment was " why on earth would someone want to fix now " which you highlighted and said " is the correct answer ", I have just given a couple of reasons why they might want to

Sorry, I'm bored of this now. I could answer your post but feel the answer is already in the previous 2 pages so perhaps you could just read them again instead?

 

[Uncle Spielberg]

I am not disagreeing with you and your points but not everybody follows the Sterling Yield and reads the FT, they want a fixed rate so they can plan and budget the mortgage and do not want to take any risks ( for better or worse ) with a tracker rate or discount rate that can up and down

 

[Leekbrookgull]

Film help,needed.

I am trying to track down a dvd of 1997 ? film, Conair. Any help would be welome.

 

[Cian]

Probably will rise to 5.5% by the end of the year.

I am appearing on the local TV station tonight supposedly as an expert in finance.

My advice to the local citizens of Manchester is

Don't Panic

Channel M? Ooh, that means we call all watch you on SKY... what time?

 

[El Presidente]

9pm on channel 203.

 

[Shropshire Seagull]

My IFA is a top geezer, he was telling me to go fixed rate last summer. With this advice a remortgaged 3 of my 4 loans to fixed and just one to tracker Probably now gonna save me about £500 per month - that IS good advice.

So only one increase in the post next month and my tenants rent will go up by inflation (circa +3%).

If anyone wants a contact for an top IFA - particularly if interested in overseas property - PM me.

 

[Mrs Coach]

Mr Coach was more cautious than me, but I wanted to know how much I've got to pay from now till the mortgage ends (in ten years) - £525 didn't seem too bad but the endowment part of it will give me a nine k shortfall (instead of the twenty k windfall we were promised back in the day!) so there'll be no suprises for me. I suppose if it drops by a lot, it might be worth me paying the penalty but I dont think it will - famous last words!

 

[Cheshire Cat]

Mr Coach was more cautious than me, but I wanted to know how much I've got to pay from now till the mortgage ends (in ten years) - £525 didn't seem too bad but the endowment part of it will give me a nine k shortfall (instead of the twenty k windfall we were promised back in the day!) so there'll be no suprises for me. I suppose if it drops by a lot, it might be worth me paying the penalty but I dont think it will - famous last words!

If you are going to be short on the capital repayment (the endowment), switch that part (or more if you can afford it) to a repayment mortgage while keeping the endowment going. That way although it will cost you a bit more, you will be sure of actually paying off the loan when the term ends and shouldn't have to suddenly stump up the £9k in cash which the building society will demand to pay off the loan in full.
ie. £100k loan, paid for by £75k (or whatever actual value is by endowment hopefuly - but keep a track of its predicted value just in case) and £25k capital repayment.

Interest rates are another story altogether.... buy crystal ball, stare into hopefully, take wild guess at how economy will perform in next 5 to 25 years, write large cheque each month.....