So it's my turn to start thinking about this. Our first 2 years is up in May. Currently paying 5.7% which was agreed when Bank Base Rate (BBR) was 5%.

So there's naiive old me thinking we'll be in the money come May now BBRs have plummeted to 0.5%. Spoke to the broker (one that arranged our mortgage has left company and this new guy is nowhere near as good and doesn't seem to know much - a bit worrying) and it seems this is not the case.

Appears much depends on your Loan to Value ratio (LTV). I think come May ours will unfortunately be around 90% (we put a 10% deposit down which at the time I thought was a lot!) so we may not be able to get the best deals. Can't really afford to put any more capital into the house.

He was quoting me new fixed rates of 7% which really shocked me. Even best variable rates might be as high as 3% above BBR. I suppose one option would be to get the house valued.

So rather than asking explicit questions, I ask you to discuss the following statements I have read from various sources:

1. "the current LTV figure will be based on an estimate of the house value, which will just be the asking price rated down in line with market falls since"

2. "Need to get LTV below 75% to get the best rates"

3. "Standard SVR will be around BBRs + 2.5%"

4. "BBRs expected to stay very low for some time yet - maybe even until 2014 and if they do rise will be no more than 1.5%"

5. "If LTV > 90% may as well switch onto current lender's SVR"

6. "Banks rates more tied into LIBOR (rate at which they themselves can borrow) than BBRs these days"

Facts or myths? Any opinions much appreciated.

On 4 and 6.

Historically banks could borrow at the BBR - now the rate (LIBOR) is slightly higher (it was a year ago much much higher) - the ability to be able to fund lending at a low rate is necessary for people like us to get rates.

Who knows where rates will go but the forward swap rates - an indication of where the market things rates might (might remember) go are broadly:

Libor today 0.5 and a bit%
2 year 1.6%
5 year 3%
10 year 4%

What rate will you be on if you 'do nothing' and revert to the bank/building society standard variable rate? You must have been quoted a rate for when your deal ends?

Although, of course no doubt rates will go up at some point - especially if you think that the general election will lead to a hung parliament which will in turn lead to uncertainity in Britain's governments ability to service its debt, which may push up interest rates as some economists fear...

I work as a remortgage consultant so i feel pretty well equipped to speak here



if you put down 10% down 2yrs ago I would have expected you to have close to zero equity currently. When valuers put a price on your house for remortgage purposes they will firstly look for comparable evidence on http://www.nethouseprices.co.uk or similar - they have to have sold within the last 6mths or no good.
If no houses are on there from the last 6mths then they use a house price indicator such as http://www.nationwide.co.uk/hpi to give the value of your home.




at the moment i need clients to have at least 15% equity or there are no remortgage deals i can recommend to them, unsure where he is getting this rate from unless it is just a normal purchase rate (where you will have to pay for your valuation and legal fees)

one more point, getting your house valued by an estate agent wont give the same valuation as a valuer would give for remortgage purposes, at they moment they are valueing less for remo. The banks are allowing them a 10% variance on their comparables when doing a sale but no variance on a remortgage.

eg if the comparable evidence points to a hse being worth 100k they would allow through a sale of that house for 110k. But if the hse was being remortgages and we put the val as 110k it would get downvalued to 100k

also an estate agent will jus tell u what u want to hear to get u on the market (then reduce ur price frm there)

nhat, I wonder if you'd mind me hijacking your thread for some advice?

Directed to our thread expert, Stick

Our fixed rate is up at the end of April and I've just got the ball rolling on a new deal and have our IFA coming round in a week. We're in a fairly good position, the only problem perhaps being the fact that I work in a family business as a partner and my book income don't live up to my actual take home pay. I've spoken to First Direct who could offer us 2.39% over base, the only sticking point being my income although it was indicated that if we had an unblemished credit score (which I think we have) it could be fine.

Our LTV would be around 55% and as I say our credit history when we last looked had us wearing a halo. Would you perceive any problems? I'm happy to take it to PM is you'd like?

if your income isnt going to stack up then you will need a lender that will fasttrack it. A beautiful credit score wont get u past any questions about your income unfortunatly.

I dont know if 1st direct do effing (they are part of hsbc and dont let intermediaries do their mortgages). But Halifax will as long as you come out on an A-pass (which it sounds like you will). They will offer similar deals to the one you mentioned, see page 6 on here http://www.halifax-intermediaries.co.uk/pdf/mortgage_guide.pdf . These are the rates available for brokers to give you via Halifax, there maybe a bit better ones online havnt checked.

Northern Rock will 'officially' fasttrack and have a rate 2.19 over base 995fee.

With all of these lenders that do fasttrack though they do 'quality control' some cases, so they may ask for proof of income even if they say at the start that they dont, so be prepared for a change of lender if they do

Wow, didn't know that those sort of fringe benefits could come with renewing your mortgage. I'm obviously going to the wrong banks.

I'm intrigued to know which word that should be. Go on Stick let us know...

Oh and thanks for the heads up as well

Interesting that you mention Northern Rock as that's who our current fixed rate (5.49%) is with. In the letter they sent us I'm sure our repayment was only going to drop from circa £850/month to £760/month which doesn't tally with what rates they could perhaps offer. If we could get the 2.19% over base from NR then that avenue would surely be the best option... wouldn't it?

i have no idea why i put effing!! must have been the prof filter, funny tho. I think it must have said 'effing' still laughin here


the letter from nrock would just have told you what your payments would be on their SVR which is 4.79% so the rate that I mentioned above would be preferable to this (however you will have to pay 1k arr fee to get it). But this is the rate available to new customers only, deals for existing maybe different.

edit the profanity filter has done it again!! effing (without the hyphen) changes to effing, how funny

Anyway, back to my problem

So I spoke to someone at my provider, A&L. Actually turns out the only thing they will offer me is their default SVR come renewal. Got your typical unhelpful "computer says no" type girl who couldn't answer half the questions I asked her. Seems it's based on 14 factors, one of the key ones I suspect being LTV.

So come May I'm down to 4.99% from 5.69% - a saving in the short term but on dangerous ground if the SVR moves (up).

Stick - A couple of things I found out - wouldn't mind your thoughts:

- A&L SVR has actually been at 4.99% since Feb '09 so perhaps more stable than I initially thought
- one helpful thing she did do was give me historic SVRs in comparison to BBR:

SVR 6.94% when BBR 4.5% AND interestingly 3%
SVR 5.84% when BBR dropped to 2%
SVR 5.09% when BBR 1%
SVR 4.99% when BBR 0.5% (i.e. now)

- I didn't know this, but now my first 2 years is up I can actually walk away from A&L whenever I want once the SVR is in place for as little at £295. So I think my plan might be to drop onto the SVR and monitor it (they'll tell me a month before it's going to change anyway) then I can shop around for a new deal elsewhere if needed.

Sound like a plan? I guess though I'll have an equally tough time getting a fixed deal elsewhere? So unless I stick a big sum into the house, I'm stuck with SVRs for the foreseeable future? So why could I get one two years ago - is this all down to the CC word, lenders becoming tighter and general state of housing market?

Your last sentence is how it is, banks have tighter lending standards and are worried about another collapse as well as having a lack of funds to provide the mortgages.

However the crisis will abate, and whilst the BofE base rate will increase, it is likely to be slowly as they will not want to cause a shock to the system that can drag us back down (as well as the Gov't hoping to inflate some of our debts away), I can see it being a good couple of years before the BBR is at a more normal level, so I think it would be cheaper in that period to stay on the SVR.

By that time, although the fixed rate deal would likely to have increased as well, the difference between those rates and the SVRs I think will be reduced and you would have benefited from 2 years at a lower rate rather than fixing higher now, and then having to fix again. Lending standards should have loosened a bit and competition will return to the market. Also, although there may be a 2nd dip in house prices, 2 or so years down the line I think the market will hopefully have stabilsed and prices will be back on the up which will reduce your LTV and you will be more likely to get a better deal, which will be supported if your current mortgage is a repayment mortgage as you will also have paid some debt off.

So I am more or less saying that you should be ok on the SVR for the next year or 2, or at least I hope so as that is what I am doing . If I was to fix on anything, it would be on a 5 year rate, but then that is even more expensive.

I should point out though that the markets/Gov'ts/banks often surprise or are irrational, and that is why I have a lot of shoulds, thinks and maybes in what I have said. Also, there is a big risk coming up a few years down the line with the scheduled ending of the BofE liquidity facility, when that goes the banks will have not enough to lend with, but I would hope that something will be in place by then, either for it to be phased out gradually, or the part return of the wholesale/securitisation markets.

Also, I am not an expert, but I have recently changed roles at work and am now looking at the UK mortgage/housing market, and that is just my feel on what will happen, but being new to it, prehaps I am just naive.

I think that is a good analysis Woolster.

It looked different the middle of last year - and I took the plunge and fixed at 4.99% for 5 years, which was well above my SVR at the time. Overall I'm fairly happy with having the certainty over a reasonable time period, as at the end of the 5 years, my LTV should be below 50%

I think it is unbelievable that you can still get a mortgage for more than your income should allow simply by fast tracking. (which I presume is because the fast tracked mortgages are self assessed and not checked, except for the odd quality control.)

Is this not one of the main causes of this recession, were not one of the worst offenders in the UK Northern Rock?


Unbelievable

Looks like a good rate to me, and you have the peace of mind that at least it won't sky rocket.

Just read this from Robert Peston on the Beeb website who discusses the above in more detail. Very bleak outlook if the Gov't do't do anything about it.

http://www.bbc.co.uk/blogs/thereporters ... exten.html

Could have got 4.69% if I'd moved faster - rates were climbing to reflect a rising LIBOR I think...

and to be clear....this may have two effects, a possible downgrading of UK credit ratings - or the threat of it - and this will eventually push up interest rates? Does my economics hold together?

I think that could be the case if it became part of the national debt, which I don't think would happen, I think the banks will be able to pay part of it off, just not all. But it 2 years time it could become very hard/expensive to get a mortgage, pretty much like it was a year or so ago, as the banks will not be able to lend because they do not have the capital to do it.

I think I've worked that out... anything starting with F and ending with "cking" gets censored to "effing". I've seen it with the word "flicking" as well.

Let's try a few more... effing, eff, effing... edit: happens with all of them! I suspect an unintended consequence of trying to prevent people using the word with only the "u" asterisked out.

Just stumbled across this thread and there is some excellent advice on here from everyone who has contributed. There really are some bright people on here and I am currently referring to FISO on most things as I value and trust members' input on all matters ranging from this to football, cars and gadgets to even parenting!

I work in financial services myself and have done for 5 years specialising in these things and I can honestly say there isn't much more to add to what has been said, good stuff.