Interest rates and mortgages for the next few months
Discussion
Hi,
My girlfriend and I are currently renting our house from family and we have the option to buy. May as well give you our full financial details:
House it worth C. £190,000 subject to valuation
Deposit will be C. £30,000
So we will have around a 15% deposit by the time we've paid the soliitors fees and whatever else (no stamp duty as we're FTB'ers)
Most of our deposit is currently tied up in a boat that we own (we both sell boats for a living and bought this as an investment and to use over the summer) which we plan to sell at the end of the season. The rest is in ISA's.
The question I have is what, in your opinions, will happen to mortgage rates, mortgage companies' confidence and the BOE base rate over the next 6 months? At the moment, post election, banks seem to be much happier at lending 85% mortgages to FTB at around 3.7 (variable) to 4.3% (fixed) which I think is pretty good rate considering our small deposit. So am I best to get a mortgage arranged now with a view to actually signing the papers in September/October when our deposit is fully available or should we wait and see what happens nearer to the time? I'm a little nervous about waiting much longer, obviously we have another budget fairly soon, I'm worried about them taking away the stamp duty break and interest rates rising.
I must admit I haven't spoken to my mortgage broker yet as we're waiting on the final valuations to be done on our house but I was interested to see if there were any experts here in this field that wouldn't mind giving me their quick opinion.
Many thanks,
Dan Yeates
My girlfriend and I are currently renting our house from family and we have the option to buy. May as well give you our full financial details:
House it worth C. £190,000 subject to valuation
Deposit will be C. £30,000
So we will have around a 15% deposit by the time we've paid the soliitors fees and whatever else (no stamp duty as we're FTB'ers)
Most of our deposit is currently tied up in a boat that we own (we both sell boats for a living and bought this as an investment and to use over the summer) which we plan to sell at the end of the season. The rest is in ISA's.
The question I have is what, in your opinions, will happen to mortgage rates, mortgage companies' confidence and the BOE base rate over the next 6 months? At the moment, post election, banks seem to be much happier at lending 85% mortgages to FTB at around 3.7 (variable) to 4.3% (fixed) which I think is pretty good rate considering our small deposit. So am I best to get a mortgage arranged now with a view to actually signing the papers in September/October when our deposit is fully available or should we wait and see what happens nearer to the time? I'm a little nervous about waiting much longer, obviously we have another budget fairly soon, I'm worried about them taking away the stamp duty break and interest rates rising.
I must admit I haven't spoken to my mortgage broker yet as we're waiting on the final valuations to be done on our house but I was interested to see if there were any experts here in this field that wouldn't mind giving me their quick opinion.
Many thanks,
Dan Yeates
IMO with mega spending cuts coming interest rates will stay low to balance the constraining effect of the govt reigning in spending.
Eventually when things start picking up rates will rise pretty fast. But with most countries needing to deleverage for quite a few years unless the private sector goes spastic (unlikely in a more globally competitive environment) rates will stay low.
But if anyone knew the real answer they would be making mega bets on the markets with the info and not be posting on PH.
Eventually when things start picking up rates will rise pretty fast. But with most countries needing to deleverage for quite a few years unless the private sector goes spastic (unlikely in a more globally competitive environment) rates will stay low.
But if anyone knew the real answer they would be making mega bets on the markets with the info and not be posting on PH.
Personally, I wouldn't panic.
Sterling has already appreciated slightly since the election relative to the Euro. If the new Coalition Government can convince the markets it is serious about tackling the defecit, which looks like being the case, the Pound may well continue to strengthen, exerting downward pressure on inflation.
Coupled with a tightening fiscal policy, I see interest rates staying very low for the forseeable future.
Sterling has already appreciated slightly since the election relative to the Euro. If the new Coalition Government can convince the markets it is serious about tackling the defecit, which looks like being the case, the Pound may well continue to strengthen, exerting downward pressure on inflation.
Coupled with a tightening fiscal policy, I see interest rates staying very low for the forseeable future.
Thank you for your comments.
I appreciate that no one can for sure say what will happen to rates and what banks will decide to do but I want to make sure I'm not missing anything obvious! I don't want to apply for a mortgage in 4, 5 or 6 months time only to find out that the rates were much much better now.
I appreciate that no one can for sure say what will happen to rates and what banks will decide to do but I want to make sure I'm not missing anything obvious! I don't want to apply for a mortgage in 4, 5 or 6 months time only to find out that the rates were much much better now.
Im in a similiar position myself. I have a 10-15% deposit saved and im looking to buy in next few months. I cant decide whether to go on a fixed or variable rate. I suspect the interest will stay low for the next 18 months or so, making a variable rate very attractive. But the fixed rate gives me piece of mind that im paying x amount for the next 2 or so years and can budget for it accordingly. Its a tough one.
The average UK mortgage rate over the last 25 years has been something like 7% so think about how you would cope with that. So long-term fixed rate is like an insurance policy. If interest rates were to rise back to average levels in a few years, you'd find it hard to sell because others would be in the same boat.
But the answer is that nobody knows. Good luck.
But the answer is that nobody knows. Good luck.
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