Excellent deal. Most past deals have had pretty high fees. This one is fee-free.
I don't think rates will rise for quite a while but 2.89% is a great rate for 10 years peace of mind.
Another great thing about First Direct is that early repayment charges, whilst present, are significantly below those on typical 10 year fixed rate mortgages - 3% in the first year or 2% in any subsequent year.
Top comments
pikeybaby
14 Feb 1640#16
For me the math is simple. If a bank, which is in the business of making money, can offer a 10 year 2.89% mortgage, that tells you where they think interest rates are going.
The answer is nowhere, as I have been saying for years. Every other month an interest rate rise is mooted, and then lo and behold something comes along which means is doesn't happen - the financial industry is playing games with the Great British public
Let's be clear - any significant rise in rates means the UK is bust - plain and simple.
If you want to know where the UK interest rates are going the check Japan - virtually 0% for 20 years, and now they have negative interest rates.
Save your money and let your mortgage stay variable.....
marathonic
14 Feb 1637#8
Take, for example, a couple in an area with a good school in a house that they see themselves living in for the long term where one partner has just fallen pregnant with the first of a few planned children.
For this hypothetical couple, knowing that they'll be paying 2.89% until the first child is 10 years old may be more desirable than paying 1% less for the next two years but facing a possibility of paying 4%+ during the years after the birth of their 2nd or 3rd child - just when one of them comes off the labour market and their budget gets a whole lot tighter.
delusion
14 Feb 1634#3
On one hand you have the 'security' of knowing your rate will not change over the next 10 years. On the other you are stuck with an early repayment charge for all of that time.
I never get tempted by these long term mortgages personally, with a 60 percent LTV you could get a rate 1-1.5 percent lower than this on a short deal. Saving thousands per year and also the option of no ERC.
Seems a lot to lose just for peace of mind that your rates payable will not change over a longer period. Just my opinion
marathonic
14 Feb 1625#25
This shows a lack of understanding of financial markets. The bank actually sell on the debt immediately and their profit is guaranteed regardless of the direction of rates. Their only problems will arise for borrowers who stop paying - a matter that is, for the most part, unrelated to the future direction of rates. Indeed, the risk of default is likely lower on a fixed rate than it is on a rate with no theoretical upper limit.
With the above in mind, your argument changes to that of thinking rates are going nowhere because availability of a 10-year 2.89% rate shows you where investors in debt, not the bank, think rates are going.
The major flaw with this argument is that it assumes that investors don't get it wrong. Another flaw is that investors don't even need to get it wrong. Take, for example, a pension fund that's trying to offer pension payments to a group of people based on a £2 billion fund balance. Such a fund may invest £1 billion in the debt market at 1.5% fixed for 2-years and £1 billion at 2.89% fixed for 10-years. This doesn't necessarily mean that they don't think rates will rise - just that they need a better return on their capital in the near term in order to meet their pension payment obligations.
All comments (282)
masekwm
14 Feb 16#1
Tempting, I'm on 1.79 tracker at the moment with FD.
marathonic
14 Feb 1610#2
The 75% LTV fee-free version is only 0.1% extra at 2.99%.
delusion
14 Feb 1634#3
On one hand you have the 'security' of knowing your rate will not change over the next 10 years. On the other you are stuck with an early repayment charge for all of that time.
I never get tempted by these long term mortgages personally, with a 60 percent LTV you could get a rate 1-1.5 percent lower than this on a short deal. Saving thousands per year and also the option of no ERC.
Seems a lot to lose just for peace of mind that your rates payable will not change over a longer period. Just my opinion
james8169 to delusion
14 Feb 161#35
I remember how happy I was to take a 10 year fix at 4.39% because (9 years ago) rates were predicted to rocket - expensive every month and to buy myself out of! This is still a great deal if you are stretching yourself and cannot afford for rates to rise. It will depend on your attitude to risk and personal circumstance.
Nicolas to delusion
14 Feb 16#82
But u pay fees for this short term theoretically cheap rates, many of them come with a 1000 to 2000 booking fee plus surveys in some case or even conveyancing
False economy?
soulhunter123777 to delusion
15 Feb 16#182
You may have to pay arrangement or valuation fees to frequently switch between the best deals, which might negate any benefit.
muffboy
14 Feb 167#4
What is a mortgage?
twe to muffboy
14 Feb 161#11
It's when you get married and part of your life is owned by someone else, you will struggle to pay your debts back to regain it.
M_z to muffboy
14 Feb 161#49
It's kind of like rent, but you only pay it for 25 years, then live rent free for the rest of your life. 25 years seems a lot when you start, but after 15 years, you release that it really isn't.
Unfortunately, because successive governments have been pretty useless, they have resorted to promoting houses as assets rather than homes to make the economy look better than it is - so lots of people are struggling to afford a house, even on a decent wage.
saraye to muffboy
14 Feb 161#120
The literal meaning is dead pledge in Latin :wink:
crazzzzzy_b to muffboy
14 Feb 16#134
Ask your parents they will tell you, but you don't need to worry until you leave school
mushypeas25 to muffboy
14 Feb 16#138
A mortgage is when you borrow money that doesn't exist to pay for a house which does exist which enslaves you for the next 25-30 years. Good luck!
bass2655 to muffboy
15 Feb 16#191
It means debt till death
muffboy
14 Feb 1620#5
In some respects similar to having a WIFE then?
JPS
14 Feb 16#6
10 years is a hellova commitment, as decent as the rate is - let's be honest you won't get a rate like this in 5/6 years time! But still....big commitment when so much can happen and change in one's life in 10 years.
marathonic to JPS
14 Feb 162#7
Yeah, it's a long term but that's why there are so many products on the market - this product doesn't offer the flexibility a lot of people need, but it does offer the security a lot of others do.
Everyone has different requirements and this is the next deal for this with a requirement of security in repayments for 10 years.
It obviously won't be suitable for those still moving up the property ladder but may be perfect for those with a tight budget and currently residing in their 'forever' home.
Obviously, circumstances can change but, after the first year, early repayment charges on this mortgage are only 2% which is a low price to pay when compared to the 7% I've seen on other products (there are probably others even higher).
uksnapper to JPS
14 Feb 16#126
Ive been in the same house for 34 years,had two divorces and now re-mortgaged with Halifax on interest only at 5.2%
This FD deal is a good one grab it if you can
meatpie613 to JPS
14 Feb 16#175
are you talking possible divorce? I suggest you change your outlook on what the commitment to be married means! just saying
marathonic
14 Feb 1637#8
Take, for example, a couple in an area with a good school in a house that they see themselves living in for the long term where one partner has just fallen pregnant with the first of a few planned children.
For this hypothetical couple, knowing that they'll be paying 2.89% until the first child is 10 years old may be more desirable than paying 1% less for the next two years but facing a possibility of paying 4%+ during the years after the birth of their 2nd or 3rd child - just when one of them comes off the labour market and their budget gets a whole lot tighter.
hcc27 to marathonic
14 Feb 16#44
You make a very persuasive, coherent argument.
cromarty to marathonic
14 Feb 16#63
Similar to our situation when we bought a new house some years ago (one 2-y-o, wife pregnant and stopping work) and took out a 10 year fix for what we thought was our long term home. Unfortunately circumstances changed 7 years in and we needed to sell up and move out to rented for 6 months - so had to pay the fee to get out of the fix. Luckily it was with Nationwide and their fee tapered it was not that much. In November last year I took out a 2.19% HSBC 5 year fixed rate mortgage (60% LTV). Having had that experience I now think 5 years is long enough.
Mentos to marathonic
14 Feb 16#77
I think the other consideration in such a scenario is that said couple may not be able to remortgage as their income will have changed (childcare/one parent staying at home).
I suspect rates will stay low. And even if they do rise, you can probably jump to another discounted rate around this mark. But you have to have the confidence you'll still be equally credit worthy throughout to keep hopping.
andykapa to marathonic
14 Feb 16#108
Hello Experts i have a question if you kindly reply. I have outstanding mortgage of £160000 and my property worth about £460000 or might be bit more. Would this deal is suitable for me and can i apply this for re-mortgage? Many thanks
thepharmacist
14 Feb 161#9
Could you move this mortgage if you moved ? (Hope it is not a daft question!)
WessexUnderwater to thepharmacist
14 Feb 161#13
Usually yep. As long as the next property meets their lending criteria.
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Opening post
I don't think rates will rise for quite a while but 2.89% is a great rate for 10 years peace of mind.
Another great thing about First Direct is that early repayment charges, whilst present, are significantly below those on typical 10 year fixed rate mortgages - 3% in the first year or 2% in any subsequent year.
Top comments
The answer is nowhere, as I have been saying for years. Every other month an interest rate rise is mooted, and then lo and behold something comes along which means is doesn't happen - the financial industry is playing games with the Great British public
Let's be clear - any significant rise in rates means the UK is bust - plain and simple.
If you want to know where the UK interest rates are going the check Japan - virtually 0% for 20 years, and now they have negative interest rates.
Save your money and let your mortgage stay variable.....
For this hypothetical couple, knowing that they'll be paying 2.89% until the first child is 10 years old may be more desirable than paying 1% less for the next two years but facing a possibility of paying 4%+ during the years after the birth of their 2nd or 3rd child - just when one of them comes off the labour market and their budget gets a whole lot tighter.
I never get tempted by these long term mortgages personally, with a 60 percent LTV you could get a rate 1-1.5 percent lower than this on a short deal. Saving thousands per year and also the option of no ERC.
Seems a lot to lose just for peace of mind that your rates payable will not change over a longer period. Just my opinion
With the above in mind, your argument changes to that of thinking rates are going nowhere because availability of a 10-year 2.89% rate shows you where investors in debt, not the bank, think rates are going.
The major flaw with this argument is that it assumes that investors don't get it wrong. Another flaw is that investors don't even need to get it wrong. Take, for example, a pension fund that's trying to offer pension payments to a group of people based on a £2 billion fund balance. Such a fund may invest £1 billion in the debt market at 1.5% fixed for 2-years and £1 billion at 2.89% fixed for 10-years. This doesn't necessarily mean that they don't think rates will rise - just that they need a better return on their capital in the near term in order to meet their pension payment obligations.
All comments (282)
I never get tempted by these long term mortgages personally, with a 60 percent LTV you could get a rate 1-1.5 percent lower than this on a short deal. Saving thousands per year and also the option of no ERC.
Seems a lot to lose just for peace of mind that your rates payable will not change over a longer period. Just my opinion
False economy?
Unfortunately, because successive governments have been pretty useless, they have resorted to promoting houses as assets rather than homes to make the economy look better than it is - so lots of people are struggling to afford a house, even on a decent wage.
Everyone has different requirements and this is the next deal for this with a requirement of security in repayments for 10 years.
It obviously won't be suitable for those still moving up the property ladder but may be perfect for those with a tight budget and currently residing in their 'forever' home.
Obviously, circumstances can change but, after the first year, early repayment charges on this mortgage are only 2% which is a low price to pay when compared to the 7% I've seen on other products (there are probably others even higher).
This FD deal is a good one grab it if you can
For this hypothetical couple, knowing that they'll be paying 2.89% until the first child is 10 years old may be more desirable than paying 1% less for the next two years but facing a possibility of paying 4%+ during the years after the birth of their 2nd or 3rd child - just when one of them comes off the labour market and their budget gets a whole lot tighter.
I suspect rates will stay low. And even if they do rise, you can probably jump to another discounted rate around this mark. But you have to have the confidence you'll still be equally credit worthy throughout to keep hopping.