I am telling you, Look at fixed rates if you have a variable rate mortgage !

I am now recommended those borrowers currently sitting on their lender’s Standard Variable Rate (SVR) to consider locking in to a fixed-rate deal.

The advice comes following the news that rates are on the rise for average fixed rate deals. John Charcol has also sounded a similar warning, as well as other leading mortgage advice firms.

Significant numbers of current borrowers will benefit over a three or five-year term if they opt to fix their mortgage payments now. I can only stress that the rates currently on offer will not be available when Bank Base Rate (BBR) starts to make its inevitably move upwards.

I can appreciate that some borrowers will feel pleased with their current mortgage arrangement particularly if they are on an SVR of between 2.5 to 3.5%. The question, ‘Why should I fix when it will mean increasing my monthly repayments?’ is often raised. I understand and sympathise that borrowers will want to pay as little as possible on a monthly basis. However, what might seem a ‘no brainer’ at present needs to be looked at in closer detail, preferably with a mortgage adviser.

All this market needs is for Bank Base Rate to begin inching up and lenders to act accordingly before any short-term gain turns to long-term pain. As can be seen by the latest Moneyfacts research, the rates for fixed-rate products are already on the rise and any movement in BBR will see this escalate greatly. When this does happen, borrowers will find that the attractive long-term fixed rates available now will no longer be an option.

Those who are contemplating remortgaging to a fixed rate should certainly consider their options right now rather than waiting. To hang on, even for a couple of months, could mean a further 30 to 40 basis points (that's 0.3 to 0.4%, or about £25 to £33.33 per month per £100,000 of mortgage loan) rise in pricing which over the course of the mortgage will add a significant amount to the overall payment.

I am fully aware that many borrowers will be feeling the benefits of significantly reduced payments at present, however, a mortgage is a long-term commitment and everyone should consider their repayments over a period much greater than the next few months.

To discuss your particular needs, please use the links to the side of this blog to contact me, or pick up the phone and dial 08458 386938.

Homeowners should fix

Homeowners should take advantage of lowest fixed rates in a decade, according to Alliance & Leicester Mortgages.

Research by Alliance & Leicester Mortgages reveals that homeowners currently on their lender's SVR risk missing out by not taking the chance to fix now at a low rate. With fixed rate deals now available from as low as 2.99%, A&L is urging borrowers who need to remortgage to act quickly in order to secure some of the best deals currently on offer for a limited period only.

The research revealed that eight out of ten (81%) borrowers currently on their lender's SVR deal have no immediate plans to search for a better deal, with a further 264,000 existing SVR holders (14%) planning to wait until interest rates and house prices start to rise again.

Alliance & Leicester commented: "It is perhaps unsurprising that some homeowners currently on SVR deals are reluctant to commit to a new mortgage but past experience shows that fixed rates tend to increase in price before the base rate, in anticipation of the base rate increasing. Although SVR deals can be favourable for the short term, once interest rates start to rise they can become unaffordable very quickly. In comparison, as well as giving borrowers the security of low, regular monthly mortgage repayments, opting for a fixed rate deal will also protect homeowners from any future rate rises."

The cost of delaying a decision (or Pinning Jelly to the Wall)

I've not written any Blog entries for many weeks now, as the market has been so fast moving that I've just not had time.

Just how fast is the market moving right now? As I write, I've just received an email from the Bank of Scotland, part of HBoS. It's now 5.43pm, and their email was timed at 5.41pm. It says "Selected Bank of Scotland tracker rates increased. Applications for removed products should be received by 5pm on Tuesday 28th October." That was 45 minutes ago !! Yesterday, I received a similar email from Cheltenham + Gloucester (C+G), at 4.15pm, to say their 90% products were becoming 85% products from 5pm !

This exact situation was brought home to me on the 10th October, 18 days ago, when a new client asked me to research a mortgage product for himself. He required a mortgage of £202,500, which was 90% of the property value. From a possible 16 products that fitted the criteria, the most suitable product at that time was a Tracker product at 5.93% with an arrangement fee of £599. He would have paid a total of £24,625 over the first 24 months, including the lender's arrangement fee. The best 2 year Fixed Rate product was 6.48%, with a £999 arrangement fee (total cost over 2 years being £27,243). Because of his procrastination, those products have now disappeared, along with all other Tracker products at 90% Loan to Value. Today, only 2 products appear on my sourcing system for his requirements. The most suitable product is now a 2 year Fixed rate at 7.69% with an arrangement fee of £995, making the total to pay over the first 2 years a total of £32,139, or an increase of over £7,514 for the sake of his procrastination over the last 18 days. It's an expensive lesson to have to swallow.

I'm often asked "When is the best time to buy property?". I have two stock answers.. (1) Now, and (2) Whose crystal ball shall I use, yours or mine? (although I hate to answer a question with a question!)

I just want to make it abundantly clear that the market is moving so fast, and sometimes in retrospect, it is becoming increasingly hard to find the right product and for the borrower to make a decision about the product that is presented to them, only for it to be withdrawn at ultra-short notice, if any.

It really is a hard lesson to learn, and it's still not getting any easier to pin jelly to the wall !