[Stoatman]

Hi Guys,

There seems to be alot of intelligent people on here regarding politics and finance issues. I know pretty much zilch , but am learning slowly.

Anyway , what do people think will happen over the next few months regarding interest rates ? My mortgage fixed rate is due to expire in march - its about 5.7 % at present.

Will they go down again ? Do you think a few months time would be a good place to be re-mortgaging as the market may have settled ?.

Any opinions highly appreciated.

[Dony]

If I were you I'd get Christmas over you, and then early in the New Year speak to an independent advisor to see what is available, as well as checking rates on sites like moneysupermarket.com

The rates are ridiculously low and may go down slightly again, but after that they can only start to rise again.

You should be in a good position to get a great deal come March.



Edit: I know you wanted a response from one of the more intelligent members and I'm sure one will be along shortly.

[Chrisoldinho]

Get a new deal when you can mate (if you can). That is what I would do, they may stay low for a year or so but eventually they will begin to rise as deflation sets in and the market begins to react as people have more money to spend.

Chris.

[Jenn]

Our fixed rate is coming up in February and I'm hoping the banks will lower the fixed rates because at the moment it seems somehow we'd be getting the same deal as 5 years ago which isn't such a good deal compared to the BoE rates.

[Ian J]

I agree with Dony as hopefully things will have settled down a bit in a couple of months and the picture may be a little clearer

[eric pisch]

I am really worried in the back of my mind, I remember the last recession and i just dont rememeber the car industry going down hill so fast, well its actually free falling now, new cars are hard to shift and some are coming with mad discounts, only then to have 75% wiped of there value in 3 years. Its got so bad so fast that a bentley just out of warranty has lost 100k ... and is actually affordable for me >.<

This coupled with the massive dept the uk has and will have next year just makes me worried that we may be in this for the long term.

[domtheone]

I think we'll see rates come down a tad more yet such is the doom and gloom around at the moment.

I've just discovered that my online savings acc interest has fallen from 5.90% to 4.25% overnight and my ISA from 4.9%ish to 3.10%.

Time to have a look around me thinks.

Terrible time for savers. Not worth saving at the mo so I may as well start looking for a house

[Yandros]

Stoatman,

We're practically in uncharted waters. Most predict interest rates will drop again (possibly to near zero in the first part of next year). I just heard on radio 4 talk of starting off the sterling printing presses once we hit 0% as a last ditch measure to produce money for loans.

The problem you may have is getting a mortgage at all. What percentage of the CURRENT value of your house is your mortage? You'll have trouble getting a good deal if your mortage is over 60%, and may not be able to remortgage at all if you're much over 75%.

The complication is that the inter-bank lending rate (LIBOR) used to track base rates very closely. As a result of this current fisco, banks don't trust each other so are charging well above the Bank of England base rate to each other. This LIBOR rate is the one that dictates mortgage rates. So, even with IR's ar 2%, you'll not see anything like that in the fixed rate deals. Having said that, the fixed rate deals next year probably will be as low as they'll go for some time, so I'd grab 'em while you can. The talk is of a situation Japan faced a few years ago with 0% IRs, collapsed house prices and no growth...if that's the case I guess the banks will just bump along on the bottom with rates pretty much stagnant for years.

For what it's worth, we're battening down the financial hatches and paying off the mortgage as fast as possible. It does have the potential to get very ugly in a variety of unexpected ways, so my advice would be to minimise and spread your risks as much as possible.

[Yandros]

Originally Posted by domtheone

I think we'll see rates come down a tad more yet such is the doom and gloom around at the moment.

I've just discovered that my online savings acc interest has fallen from 5.90% to 4.25% overnight and my ISA from 4.9%ish to 3.10%.

Time to have a look around me thinks.

Terrible time for savers. Not worth saving at the mo so I may as well start looking for a house

You are joking right?

There's an old saying..."never catch a falling knife". I'd sit this one out until the dust settles if I were you.

[domtheone]

Originally Posted by Yandros

You are joking right?

There's an old saying..."never catch a falling knife". I'd sit this one out until the dust settles if I were you.

Takes a bit of time between looking and buying.

Prices are still rediculously high and we could have 1-3 years of falls still so i'm in no hurry

[nheather]

Whilst it worries me to defend banks I don't think it as simple as the government makes out to pass on interest rate cuts.

The Bank of England rate has an influence of course but its the inter-bank trading rate (Libor) that matters - this is the rate at which they can borrow money.

This hasn't been falling as quickly as the the BoE rate.

The BoE rate just fell from 3% to 2%

But Libor fell from 3.7% to 3.4%

So if the bank lends at less than 3.4% they will lose money. In fact they have to pay all there bills (wages, rent , utilities, marketing etc) so they need to lend at quite a bit more than 3.4% to break even.

So I wouldn't expect to see banks in a position to drop rates that much.

Cheers,

Nigel

[Hi-Def]

Originally Posted by Yandros

You are joking right?

There's an old saying..."never catch a falling knife". I'd sit this one out until the dust settles if I were you.

depends if you can negotiate a nice discount if you get 30-40% off prices in march-ish then you'll be ok.

tbh my savings are taking a massive hit with IRs halved ISA was 6% in oct and now its 3.5%

to the OP i think waiting till March would be about the right time to get a better deal and we will be 6/7 months into this situation and we will see what's really going on. Also banks my sort themselves out and start lending again.