On Tracker Should I look for a fixed rate now

C

catchphrase

Registered User
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Hi there,
Im on a tracker rate at the moment with Bank of Scotland, the only thing is Im worried that although it is coming down at the moment, it might go up again, would I be better off going to fix now or do you think the interest rates will stay down for a couple of years. Last year I was crippled when all the rates went up and Im afraid of that happening again. Also will the banks change to fixed easy enough, and what rate should I be looking for if I were to get fixed?
Clueless
Ann
Thanks
 
Put the money you are saving now aside for when the rates go up again, fixing rates is a bet against a bank. Unless you are happy with a really long fix ,in the short term (under 5 years) the bank will win, you will pay more than you would have done on a tracker.
 
Keep paying now as much as you can of what you were paying when rates were high for what its worth
 
what you have you hold, the tracker is better value now so why give the bank more of your money now, i feel that when the current ression ends but that will take a few years the interest rates wont rise that much as financial bodies wont want a repeat and things will be a a realistic level,
 
so you reckon I should stay on the tracker rate then, i just think everything seems so unpredictable at the moment, why are they able to bring them down so low now and yet they had them going up so high last year, i dont understand what way there working at all.
 
Ok, this is a very simplistic, but

Your mortgage 'tracks' the ECB rate, which is set by the ECB (your rate will be ECB +1% or something like that).

When times are good, ECB rates are (generally) high
When times are bad, ECB rates are (generally) low.

Times are very bad right now, but they will get better (we all hope). When that is, nobody can say. Rates may fall again this year, and you can be sure they will rise again, perhaps to levels even higher were seen last year, but that day is probably some time away at the moment.

One things is for sure right now, if you leave your tracker, you won't get it back. Fixed rates will always be available.

As to whether to fix or not, some of what is said in this thread may be of use.
 
What tracker rate are you on? have you seen what fixed rates are available?
 
catchphrase said:
im on ecb + 1.5
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ECB + 1.5 gives 3%. The best rate (imo) from Halifax at the moment is 5 year fixed at 3.8%. Rates would need to go up another 1% for the tracker to be worse off than the fixed rate. So the question becomes, do you think rates will go up by 1% or more in the next 5 years.

Longer term, don't forget too that when you come off the fixed rate, there's no guarantee the bank will offer you a tracker again and you might be stuck with the standard variable or a higher fixed rate.

I would keep the tracker.
 
deflation will be around for a year or two more by the looks of things. Stick with the tracker till then. Can't see the ECB Rate going up beyond what it is now for another 18 months.
 
Hi there, on ECB + 0.5% tracker.
Same question should I look for a fixed rate now or stay with tracker? Big mortgage!
 
ndublinooc said:
Hi there, on ECB + 0.5% tracker.
Same question should I look for a fixed rate now or stay with tracker? Big mortgage!
Click to expand...


The best fixed rate your likely to get would be over 4% for 5 to 10years, the ECB would need to rise above 5% before the fixed would save you anything substancial. I think we will not see the ECB above 5% in the next 2 years, so in reality you will be paying a huge premium now for possible savings in the future, i.e. 2.x% extra per month for the next two years.
Your tracker rate was one of best avaiable and should not be even up lightly.
You could start making larger repayments (what you would be paying if your on a fixed rate of say 4.5%) into a saving account now and atleast you will have that should rates rise.
For people on a tracker of ECB+1.5% the desision is harder, but your rate is so low i cant see a fixed being of more benifit.
 
Thanks Senna, I'm convinced on the long term argument but worried that so much worldwide interest rate slackening and fiscal stimulus will result in the ECB having to raise interest rates higher than we've heretofore seen.
 
catchphrase said:
. Last year I was crippled when all the rates went up and Im afraid of that happening again.
Click to expand...

Rates are so low currently that the only way they can now go is up, when that will be no one can guess, I certainly don't see them going down much further, keep an eye on things and the minute you see a good fixed rate that you can cope with you should lock into that. Meanwhile I'd be overpaying the tracker rate. Never forget that rates can go up as well as down.

I wouldn't necessarily look at it as trying to beat the bank, it's more important that you are happy and comfortable with your repayments, if the price of that is a little bit higher than others pay then so be it.
 
if the banks are quoting a fixed rate of 4% over 5 years - they are infact making a statement that they believe rates will be below 4% over the next 5 years! sounds simple but worth bearing in mind.

I would think of leaving a tracker for a fixed rate as taking out an insurance policy against higher interest rates rather than trying 'to beat the bank' - personally though I'm keeping my tracker!

try to over-pay (or set aside) the difference between what you were paying when rates were high and what they are now - that way you can re-adjust ir rates do go up
 
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