Monday, July 20, 2009

To fix or not to fix


Fixed rate versus floating rate mortgages - which would you choose?

Being a renter, this isn't a question that holds my attention.

However, I do detect a treacherous little uptick in recent mortgage rates.

12 comments:

  1. Alice, this could be your moment for getting back into the property market, err, in Dubai.

    http://www.marketoracle.co.uk/Article12114.html

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  2. Acorn

    Dubai? Do you think prices might go up?

    Actually, I was never in the property market. Since I didn't get out, I can't go back in.

    Alice

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  3. manfromthefutureJuly 20, 2009 at 3:40 PM

    It seems to me that the interest rate trend will be up from now on, since rates have to stay ahead of real inflation. I wouldn’t be surprised to see rates of 8-9% in a couple of years.

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  4. I have fixed @ 4.6% for 10 years. I reckon this is the bottom for interest rates for a long time I didit 6 months ago and the deals are gone now.

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  5. I fixed at 4.79% for ten years five years ago. D'oh !

    Always do the opposite of what I do and you'll be alright.

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  6. On interest rates it is notable that National Savings have increased their 2 year guaranteed growth bond rate to 3.75% on 13th July. It was below 1.75% before? Their 3 year rate is still at 1.75%? Are they waking up to what real savings rates should be?

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  7. An interesting exercise is to download BoEBR figures from the BoE website - and plot them in Excel; a line chart does it nicely. Then look at it and wonder whether the only rational option if you have a mortgage isn't a 10 year fix - even at 6%+.

    If inflation's going to make a comeback, rate'll rise anyway and that's what lenders are factoring in to long term fixed rates. And a bigger profit margin, of course :o)

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  8. electro-Kevin: "Always do the opposite of what I do and you'll be alright."

    You are in good company.

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  9. "this isn't a question that hasn't held my attention"

    So it has held your attention? lol

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  10. Fixed, of course. Fixed rates are pretty low even now.

    When rates go parabolic, as they must when every gopherment in the world is flooding the market with bonds, "my" fixed rate mortgage bonds will rapidly lose value and can be bought back in the market at a serious discount.

    That's the way it works in Denmark.

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  11. Kim Jong Il,

    Thanks for pointing that out. Glad you enjoyed it....

    Alice

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