Fixed Rates Falling Further

Hi,
With regard to the tracker mortgage, I changed to this about 4/5 years ago to try and recover the shortfall on my endowement. So far I have accumulated about £1,000 interest, can anyone tell me, does this come to me at the end of my mortgate.
Many thanks, Annie.

Advice required. I have a 35 year mortgage on my sole residence currently with a 2 year tracker and am about to renegotiate this mortgage. After taking out mortgage I was assigned overseas by my employer and have rented out my apartment. This is my only property I have no other abode - do I now require a Buy to Let Mortgage? The property was not bought to let but was bought as my home and will be again as soon as I finish my overseas assignment. Any advice will be much appreciated.

To Annieuk,Don't understand your comment "accummulated about £1,000 interest". Normally an accummulation of interest on a Loan or Mortgage means that you have underpaid your Loan or Mortgage by that amount and so you will be paying more interest on that £1000 interest if you do not pay it as soon as possible. That is compounded interest. If this is the case you should pay of this interest accummulation of £1000 as soon as possible. Unless of course it is some strange way of your Lender or Mortgagee telling you that you have saved that amount of interest, during your 4/5 years so far on that Tracker. If that is what the £1,000 is then it will simply mean you have not had to pay that amount of interest. Hope this helps.

Finally, as Fools we should all be asking the question, as to why Fixed Rates are becoming slightly cheaper and being sold with great fanfares, as usual?
Presumably because the Banks, as businesses foresee Bank Rates eventually coming down, when with world or global recession, demand for goods will drop, goods to be sold will then have to come down to what the market will pay, inflation rates should follow down and interest rates will follow. That is what normally happens, as night follows day, except where for instance goods become a rarity or very scarce, possibly when the world's people have mined every single raw material our world has to offer. Then those goods would become very expensive, effecting global inflation greatly if a much needed material is in short supply. Alternatives would of course then be researched and eventually found and people would more readily re-cycle goods rather than attempt to buy prohibitively expensive new. We don't just have stagflation in the UK, inflation is round the world because of the way we all trade together and Governments cannot be blamed for people's greed.
Having said all that, Fixed Rate Mortgages are good for Borrowers on Fixed Incomes in the short term, as the Borrower then fixes exactly how much mortgage he or she can and should pay, whilst that Borrower is on that Fixed Income. When the Fixed Term comes to an end the Borrower can re-negotiate depending on that Borrowers then circumstances.
I knew of people who fixed their Mortgage Rates, when Fixed Mortgages first came onto the market towards the end of the 1980s. Before then everyone was very much paying the Lenders Standard Variable Rate. Bank interest rates under the Conservative Government had gone up to about 15%, so people fixed at 11% or 12%, which was a good deal whilst the Bank rate was at 15%. However, 15% rates remained for a not very long time and as the rate gradually reduced below 10%, Borrowers who had taken a Fixed Rate Mortgage found themselves paying over the top, for the security they had had during the 15% regime. Fortunately most Lenders allowed their Borrowers to re-negotiate their loans and go onto the Lenders Standard Variable Rates, often with changes from Endowment Loans being changed to Repayment Loans. (But that is another argument - the rip off fees & commissions all the Lenders had accummulated and pocketed from what turned out to be later very poorly performing endowments). Still that seems to be business and most businesses will seek to maximise income, no matter what ultimate or unforeseen misery is caused to buyers. That is why we now fortunately have some checks on what businesses do to people - not a lot though, aor as many as I think thwere should be, with the Financial Services Ombudsman and the Office of Fair Trading, but the protection is still small for the individual.

on 22nd July, Christina wrote

"If you are coming up for renewal or you want to buy your first property, do not wait for rates to fall further. There is an extremely strong chance that they won’t, or indeed that they will rise."

I stated at the time

"Pardon me for saying this, but this article offers terrible advice. The chancellor is saying don't worry about inflation, the Bank of England Governor is saying they don't think raising interest rates will work, and one of the Monetary Policy Committee is saying rates should be cut immediately. Fixing your mortgage now would be financial suicide. Much better to wait until January when everything has calmed down and you'll get a better rate than now. I fail to see where the author gets her belief that rates will rise from." Obviously since then, banks have realised that rates are not going up, and that luckily consumers did not heed Christina's advice and dash to fix their mortgages at 1.5% above base rate. In time, banks and building societies will realise that having mortgages of people with 25% and over equity in their home will actually make them money over time, and rates will come down a bit more. If consumer spending and pay rises remain reasonable, base rates will fall and then people will be able to fix at about 5% for 10 years if they so desire.

Hi Nickx999
Thanks but I disagree. The average UK outstanding mortgage is about double your £55k figure,new mortgages are higher, and a large loan is usually categorised by lenders and brokers as £500k to £7.5m.
The lower rate, high fee deal becomes more attractive at around £750,000 (over the 2 years) and gets much more attractive as values increase. I know that sounds like a lot to some of us but it’s actually at the lower end of what’s considered a large loan.
Apologies if my definition of what is large wasn't clear though.

Hi Joe Waldron

It’s great to see that you have been reading my articles and I’m sure you will have noticed that I have been overwhelmingly in support of variable rates over fixed rates since June, as pointed out just below the section you pasted from my piece last month. But most UK borrowers do like their fixed rates and at the time I did think there was a strong chance they wouldn’t fall further.

Like most people I have found the UK mortgage market, and the wider economy, extremely hard to predict this year and while I still believe I have been right about variables being the best bet, you are spot on that in the middle of July I called the movement of swap rates (and fixed rates) incorrectly. In my defence I can only say they have been jolly volatile.

I'm with northern rock at the moment and my tie - in expires in February 2009. my rate is 4.9 and the balance on my fixed rate is £129,000. I'm paying £666.00 a month. Where do i go from here? Tracker or another fixed rate? I asked northern rock if there are any new products i can have but they said there arn't any at the moment. Any suggestions?