Mo

Whats everyones thoughts on this, how much do you see them increasing?

I am going to remortgage sometime over the next 4 weeks but due to circumstances I'm only looking at it covering the coming 2 years so I'd like to here everyones thoughts.

Thanks people and fire away!

TelBoy

Talking purely sterling, the markets are suggesting the base rate will be at about 5.25% in two years time.
But that's falling all the time, especially on days like today with European stocks down another 3%+.
I think you're safe to say we won't be seeing a rate hike any time this year, unless something quite dramatic happens.

Terry

Boss Hogg

given todays GDP figs and low inflation, we might see a rate cut

MarkO

In fact, due to the slowdown in consumer spending, the continuing market situation and the low inflation and unemployment, there's even talk of a possible rate cut in the next 4-6 months. Let's hope so, anyway.

carl

When there's a rate increase, it tends to be 0.25%. Most fixed rate mortgages are around 1% higher than the standard variable rate, so over a two year term the interest rate would have to increase by 2% to make the fixed rate and the variable rate break even.

Mo

Thanks guys.

I know it's all a gamble but do you think I may be better off looking at the cheapest 1yr deal and re-evaluating again next year?

TelBoy

I wouldn't tie it in for a year at this point at all, the only rate change you'll see in the next six months is possibly a cut, as others have said.
I'd personally choose a base rate tracker product, and re-evaluate when the signs of an economic rebound are more concrete.
At least, that's what i'm doing..!!

MarkO

I'd agree with that. Get yourself a mega-cheap tracker (e.g., the HSBC one's fairly competitive at 4.9%, IIRC). That way you'll be fine if rates stay as they are, and will benefit if they do drop.

Make sure it's something with no penalties though, and keep your eye on the markets, 'cos if anything untoward happens (e.g., some anniversary 'celebration' on 9/11, by Al-Qaeda... ) you may want to move sharpish and switch to a locked in low rate.

TBH though, if you really want peace of mind, it could be worth getting locked into a mega-low discounted 5-year rate. After all, if rates do drop it ain't gonna be by much (25-50 basis points - max) and they're really only likely to stay where they are or go back up after that.

TelBoy

Especially since the Swiss National Bank just cut 50bps!!

(even though that was sort of on the cards!)

The end of the world just begun...