Independent article on Mortgage Rates

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csirl

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[broken link removed]

Interesting article.

If they are correct, then it means that the banks will gain from anyone who's fixed for the next 5 years or so.
 
Extract:
HOMEOWNERS with tracker mortgages are set to be the big winners after it emerged yesterday that the [broken link removed]'s main rate is likely to remain at its current record low of 1pc for two years.


The European Central Bank (ECB) met yesterday and again left its key interest rate unchanged, with analysts predicting it will now be 2012 before rates start to rise again.
...

The chief economist at [broken link removed], [broken link removed], said the international markets were not pricing in a rise in ECB rates for a few years.
"The markets do not see rates rising until 2012 and Trichet said nothing to disabuse the markets of that view," Mr Hughes said.
Click to expand...
 
csirl said:
If they are correct, then it means that the banks will gain from anyone who's fixed for the next 5 years or so.
Click to expand...

I am not sure if that is correct. When the lender gives a fixed rate mortgage, it usually borrows the money to finance it at a fixed rate, so they are insulated from rate rises. But I suppose the bank who lends to the lender does gain.

Brendan
 
She warned, however, that the risk associated with short-term fixing of two to three years was that people could leave themselves exposed to a large jump in repayments within a relatively short period of years.
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This is something I hear always and I just don't get it. What difference does it make when/if the large rise happens ? Also the rate over a longer period is higher. It reminds me of that phrase 'going forward'. Throw it in anywhere in a paragraph and it'll fit nicely.
 
Whilst I would agree that rates won't be going up in the short term I don't think I'd be taking anything Austin Hughes has to say on the matter at face value. The guy has absolutely no credibility.

An expression springs to mind.

Fool me once, shame on ... shame on you.
Fool me ... you can't be fooled twice.

The chief economist at [broken link removed], [broken link removed], said the international markets were not pricing in a rise in ECB rates for a few years.
Click to expand...
No one can make that assertion. A few years? There's not an economist in the world who would state with such conviction such a long term view.

And anyways what the ECB does has no bearing whatsoever to todays mortgage market. Tracker rates are not available to new customers and Variable rates are rising independently as banks move to protect their bottom line.
 
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