Lloyds Banking Group, the owner of the UK’s biggest lender, Halifax, and Cheltenham & Gloucester,has stated that now could be the best time to get a fixed rate mortgage. They say that fixed rate mortgages are unlikely to go any further down.
The best rates on a fixed rate mortgages are as low as 2.99%. This is for people with substantial deposit and perfect credit history. However, compared to the past 10 years, these rates are low. The average fixed rate for the past 10 years is 5.84%
Standard variable rates which offer the base rate plus 1% give an interest rate of 2%
There is a temptation to get a fixed rate of 3%, it offers a very good guaranteed interest rate for the next two years. However, the prospect for base rates still suggest they could fall further to 0%.
The difficult issue is knowing how long interest rates will stay so low – so close to 0%. For example, in Japan they had interest rates of 0% for many years.
If the bank pursued quantitative easing increasing money supply then we could get a return of inflation by 2010, this could lead to interest rates rising fairly significantly. But, given state of economy it is hard to imagine interest rates rising for the foreseeable future.
It is possible fixed rates could continue to fall over 2009. But, this could be an excellent year to get a 5 year or 10 year fixed rate mortgage
Spot on with inflation coming down the pipe. Even if it doesn’t, 3% as a fixed rate is incredible. There’s a limit to how far rates can really come down on mortgages – banks aren’t going to pay you to live in a house!
If I could fix at 3% for 10 years I’d do it in a shot.
I don’t htink the banks will pass on any further cuts whether they are variable or fixed from now on so now is probably the best time to fix. If anything I think fixed rates will start going up soon.
I am not keen although 3% is very attractive – I am more than happy with my tracker at 0.69% over base…
I find fixed a bit of a false economy when the market shoots up and you come off a low fixed rate, your new rates cripples your disposable income…
I have gone for a lifetime tracker and could not be happier right now – I am overpaying my mortgage to lessen the bad effects of having an endowment (yikes!)
Feb 17th – Nationwide announce 0.2% rate cut on fixed rate (to 4.68% for 5 year)
March 1st – Nationwide have just raised 5 year fixed rate to 4.98% !!!
Two & three year fixes remain unchanged – seems they know something long-term we don’t!
Anyone waiting until May/June time could find themselves locking in at a higher rate…