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Old 28-10-2008, 16:54   #21
Dave h-j
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Quote:
Originally Posted by AdamBrunt View Post
With all this talk of 1% and even 0% rates ... what I don't get is, how is that going to help long term ?

Rates drop to 0%, everybody starts borrowing again cos they can afford 0% interest. But eventually, rates will go back up again - leaving everyone who could only borrow at 0% in the crapper
Certainly not much incentive to save Anyway, just because the BoE sets a rate, doesn't mean that a) Banks will let you borrow any money and b) they'll let you borrow at that rate...

Just look at it now, rates are 4.5%, but I don't see many 4.5 (or even 5.5%) mortgages around..

Personally I like low interest rates as it means I can pay my house off quicker (tracker + .55%) - i'm not interested in borrowing any more cash..
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Old 28-10-2008, 16:57   #22
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Originally Posted by Kryten View Post
What is required for mortgages are bonds that will allow 25-30 year fix rates like the prime US mortgages. That way people know what they will pay for the life of the mortgage and hopefully manage their money better.
Thats what I would like to do - if there was a 25 year at 4.5% fixed rate then I would go for that..
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Old 28-10-2008, 19:39   #23
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Quote:
Originally Posted by AdamBrunt View Post
With all this talk of 1% and even 0% rates ... what I don't get is, how is that going to help long term ?

Rates drop to 0%, everybody starts borrowing again cos they can afford 0% interest. But eventually, rates will go back up again - leaving everyone who could only borrow at 0% in the crapper
Checkout Japan...
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Old 28-10-2008, 20:29   #24
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Originally Posted by Dave h-j View Post
Personally I like low interest rates as it means I can pay my house off quicker (tracker + .55%) - i'm not interested in borrowing any more cash..
Same here - the BoE can keep cutting the interest rate every month at the moment

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Thats what I would like to do - if there was a 25 year at 4.5% fixed rate then I would go for that..
So would I - though not at that rate probably.
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Old 29-10-2008, 10:48   #25
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Damn, I signed up for a five year fix with Yorkshire BS last month to start in Decmeber at 5.59%. Thought it was an excellent rate but now I'm not so sure. Would mean writing the £195 fee paid so far off.

Wondering if a tracker would be better over 2 years or so. Means an extra £500 in fees and the best tracker Ive seen is still +1% of BoE.

The girl in our office who bought her first home in May is on a 5 year fix at 6.75%!!!! So its not that bad is it.

I'm really undecided now.
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Old 29-10-2008, 10:51   #26
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Fix if you want guarantees, track if you want to risk it. Simple as that really
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Old 29-10-2008, 11:02   #27
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I fixed my mortgage for 10 years at 6%... mainly because it stretched us to the limit to get the house we wanted. Whilst its a little bit annoying to know that at the moment its costing me some cash (although probably not that much) but at least I know that with inflation the relative cost is going down each year and we know we can afford it. Plus if we ever did see the heady heights of 7 or 8% then I'm happy i can still afford my mortgage.
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Old 29-10-2008, 12:34   #28
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I got a 2 year tracker from A&L in January at + 0.16 above base (I think I was very lucky!!), so that's working out quite nicely at the moment. It'll be interesting come Jan 2010 to see what Banks are offering, hopefully things will have calmed down a little then!
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Old 29-10-2008, 14:27   #29
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Originally Posted by Kryten View Post
Fix if you want guarantees, track if you want to risk it. Simple as that really
It certainly isn't as simple as that though is it. I still remember your long thread when you were trying to find a mortgage, it's simple when your looking in but not so easy when it's your mortgage.

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Old 29-10-2008, 14:51   #30
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Tim Besley (MPC Member) gave a speech yesterday which contains some interesting charts - Some Current Issues in UK Monetary Policy.

Of particular interest was Chart 12, Page 16 showing the average mortgage rates over the last ten years for each type of mortgage (Discount, Fixed, Tracker, SVR) assuming a 75% LTV.

I was very surprised to see that a discount mortgage looks like it would have been the cheapest over that period for most of the time (or all of the time compared to tracker/SVR, and you could only beat it with a fixed rate if you fixed at the right time).

Given the changes in funding sources for banks and building societies over the last year, it will be interesting to see which of these mortgage types is best over the next few years as the graph seems to show them all converging to more or less the same rate over the last few months, SVR excluded.
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Old 29-10-2008, 15:16   #31
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The House Price Inflation in '88 according to that report was insane!!

Of course the crash a year later was even worse, but still...
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Old 29-10-2008, 15:43   #32
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It certainly isn't as simple as that though is it. I still remember your long thread when you were trying to find a mortgage, it's simple when your looking in but not so easy when it's your mortgage.
Yeah, I'll give you that! I was in a situation though where I wanted to massively overpay so that limited my choices eliminating a lot of fixed rate deals.

I am happy with my current tracker though at the moment (more so if the rates go down next week!)
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Old 30-10-2008, 07:41   #33
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http://news.bbc.co.uk/1/hi/business/7698614.stm

Another article stating that we need large and agressive rate cuts. I would have no complaints if the BofE matched the US Fed with a 1% rate, but I do not see it happening Still another 1-1.5% off the current rate would not be too bad either, but it is the LIBOR rate that needs to drop really.
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Old 30-10-2008, 09:43   #34
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Blanchflower has been voting for cuts for aaaaaaaaaaages. Even when CPI was nicely within the target and the only reason to cut would have been to keep house prices going up.(IMO they did this a number of times when it would have been far better to allow house price inflation to slow.) In that sense he's not really changed his tune for a while and eventually started making sense. If you ignore the threat to the currency anyway.
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Old 30-10-2008, 09:56   #35
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Yeah, I've looked at the voting history in th past and seen he always votes for cuts so this is nothing new from him. However it does seem to be gaining a lot of backing now so hopefully he will get his way for once!
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Old 30-10-2008, 12:46   #36
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The last time the US had an interest at 1% it created the biggest speculation bubble in history.
Let see what will happen now. But I have doubts that the house market bubble will recover anytime soon on any place on Earth.

The house market is deflating fast and the central banks cannot do anything about it. The next subprime wave should burst in April 09. The crise is not over. So what next deflation or hyper inflation ?
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Old 31-10-2008, 08:39   #37
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http://news.bbc.co.uk/1/hi/world/asi...ic/7701319.stm

So the Bank of Japan has cut rates to 0.3% That is a very low rate! Do not think we will ever get close to that.
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Old 05-11-2008, 17:47   #38
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So we get the BofE interest rate announcement tomorrow at noon. The smart money seems to be on another 0.5% cut, but some are saying 0.75% or even 1% is possible.
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Last edited by Kryten; 05-11-2008 at 17:47.
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Old 05-11-2008, 18:46   #39
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So we get the BofE interest rate announcement tomorrow at noon. The smart money seems to be on another 0.5% cut, but some are saying 0.75% or even 1% is possible.
Say hello to the days of £1 = $1.40.
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Old 06-11-2008, 07:36   #40
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Yeah, that is my worry as I need to get some dollars soon and am off there at Christmas
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