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0 pointsoliwarner3y ago0 comments

And compared to a couple of years ago, that's really expensive.

The mortgage we took out two years ago (2 year fix, ~60% LTV) had a introductory rate of 1.2%.

That falls back to 3.something variable in September. We'll probably look for another fixed but current 2yr fixed rates seem to be around 2.3% (plus a £1k application). That's an uncomfortable increase on a big loan.

What's interesting is the rates on bigger loans (eg 90% LTV) aren't much more (2.4%+application). That's not what I'd expect a bank to offer if they expected a bursting bubble.

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2ion3y ago

That's really interesting. Is it normal in UK (thinking £) to get such an extremely short (introductory) loan and then refinance every few years? In Germany, most people take a 10y fixed rate at least to reduce such risk.

nsteel3y ago

Yes, here 2 and 5 years is the norm. There's talk of longer terms becoming more popular but that's probably just talk due to the current climate of rising rates. I've spoken to a few brokers lately and not one even mentioned anything longer than 5.

It feels like there's a few signs now that the so-called "18-year property cycle" is due to be cut short this time around. I've only recently heard the idea so I'm not sure how it's real it is (outside of their circles that have a vested interested in the timeline it predicts). UK lenders seem to be now toughening lending rules rather than relaxing them as they were "supposed" to. Not sure it's a good time to invest or not!

lmt553y ago

7 and 10 years are quite widely available now, although they're still not particularly popular.

Not sure why brokers didn't mention them to you. Perhaps they like to show people low headline rates, or perhaps they see longer initial terms as bad for the broking business?

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robga3y ago

Not only that, it’s popular to get “tracker” mortgages. It’s the Bank of England base rate plus a fixed rate. So it’s never actually fixed. My “Lifetime Tracker” is BOE+1.29% for 25 years. So it’s varied from 1.39% to 2.04% total charge in the last 10 years. If you bought a lifetime tracker today it would be BOE+2.7%. 20 years ago they were as good as BOE+0.25%

apexalpha3y ago

Mine is currently 105% LTV, haha.

We will drop 0.4% once we get below 66% LTV or so. Also, ours is 20 years fixed. The variable or 5 year fixed was even lower still, around 1.5% at 100% LTV.

It's still ridiculously low, which is why we're happy to pay a bit more to get it fixed for 20 years.

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