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Aertuun posted:If 5 year fixed rates are being offered at lower rates than 2 year fixes, it might be because there's an expectation rates will be lower in the future. Or, it might not. I'm guessing that you are neither a mortgage adviser or a financial adviser. Thank you for your valuable contribution.
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Jun 13, 2023 23:02
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Charles Leclerc posted:I'm guessing. You've been doing a fair amount of guessing over the past few pages. There's been some good advice and some bad advice, to be fair, but when you make statements like "the direction of travel for interest rates is somewhat more predictable than wider investment markets", expect to have someone say that's flat out wrong, and even dangerous. Some people do come to this thread to ask questions about important financial decisions.
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Jun 14, 2023 06:48
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It’s obviously true that internet rates are more predictable than other financial markets. There’s a far more limited number of inputs that’s change far less frequency. You can say right now with 90% certainty that the base rate will go up by 25bps next week, not a statement you could make about equity markets. The prediction of future rates is quantified in the SONIA swap curve, which is the largest driver in how mortgages are priced. That basically represents the size of the fixed rate return mortgage lenders have to offer to pension funds/insurers in order to to receive variable rate returns in exchange. Five year fixes being priced below two year fixes implies that the market expectation is that interest rates will average lower over the next five years than over the next two. (Bond pricing is not really a determinant - I feel like you may have been reading articles about the US mortgage market. Large UK lenders do not do much mortgage securitisation, they tend to hold mortgages on balance sheet.)
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Jun 14, 2023 08:06
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peanut- posted:It’s obviously true that internet rates are more predictable than other financial markets. There’s a far more limited number of inputs that’s change far less frequency. You can say right now with 90% certainty that the base rate will go up by 25bps next week, not a statement you could make about equity markets. Interesting. A lot of good points. I don't tend to read a lot about the US mortgage market, but then it's also true I also don't know exactly how much each different lender in the UK relies on mortgage securitisation. We can certainly have an debate over how "predictable" interest rates are compared to other financial markets, but in the context of giving financial advice to someone considering buying a home in this thread, I would argue that interest rates are no more predictable than any other financial market. We would need to know about which lenders were offering them products, what their particular circumstances are, and what factors would effect that lender's products in 3, 6, 9, 12 months time, in addition to 2, 5, 10 years down the line. It's far better to give advice based on someone's individual circumstances, with a deep understanding of their financial situation. If someone can predict what UK mortgage lenders rates are going to be 6, 12, 24 and 60 months down the line, please post in this thread ASAP. Market pricing might imply a number of things, it's true. However implication isn't certainty and market expectations have also, frequently, turned out to be completely wrong. Five year fixes being priced lower might indeed show that the market expectation is that interest rates will be lower over the next five years. However the market expectation 6 and 12 months ago was dramatically different.
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Jun 14, 2023 09:10
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Yeah I don't really disagree with any of that, though I've lost track of what's really being argued about here! I think the basis for the advice about how you can't beat the market often gets a bit confused though. It's not a claim that the future of financial markets are unknowable. It's a claim that you personally cannot consistently predict them better than the market as a whole In the specific example of rates - the SONIA swap curve represents the consensus market prediction for the evolution of interest rates over the next few years. The only money-making opportunities would involve taking a view counter to that, so betting that rates will rise by more or less than the market predicts and the current level represents a mis-pricing. A belief that no-one can consistently outperform the market is one that implies faith that the market's prediction of the future is much more accurate than anyone else's.
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Jun 14, 2023 09:55
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peanut- posted:Yeah I don't really disagree with any of that, though I've lost track of what's really being argued about here! Nothing to do with you, I've found all your posts that I've read to be interesting and insightful. I was concerned that Charles Leclerc was stating a lot of things with quite... err... aggressive certainty that were (IMO) incorrect. Obviously this happens all the time on Internet and by journalists and economists and everyone else, but for some reason I thought I should dive in. I would love to continue on the vein of discussion that you've started, as you've put a focus on the different mechanics of how an everyday "consumer" interacts with equity vs mortgage markets. I think I've got a slightly different take on your last point, for example (but that doesn't necessarily mean it's incorrect). However to go into it in detail I suspect that would be a substantial derail to a thread that's mainly focused on choosing savings accounts and planning house buying decisions...
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Jun 14, 2023 10:33
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I’m living abroad but still have a significant amount of my net worth in the U.K. (pensions, investments, and cash savings). Prior to moving abroad I checked with my pension providers and bank and there was no issue with me keeping my accounts open but generally I couldn’t open new U.K. accounts while resident abroad or contribute more to U.K. pensions/investment funds without things getting complicated. My savings account rates are painfully low while my U.K. bank has other savings products with significantly higher rates (nothing to keep up with inflation of course, but it will help limit the damage more than my status quo). But yeah, the conditions say that to open a new account I need to be resident in the U.K. I figure I know the answer already but I’ll ask in case anyone has dealt with something similar: is there anything I can do to benefit from higher savings rates out there, or am I out of luck until I eventually move back to the U.K.? Moving my assets abroad doesn’t seem worth the hassle or fees as I plan to repatriate to the U.K. later this year or next.
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Jun 19, 2023 09:57
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Depending on where you are you could try premium bonds? The equivalent rates aren’t terrible and it looks like you can still use them as long as you have a UK bank account and wherever you are doesn’t have a local law restricting you.
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Jun 19, 2023 10:10
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Is there an idiots guide to pension transfers as part of a divorce?
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Jun 19, 2023 10:36
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Pantsmaster Bill posted:Depending on where you are you could try premium bonds? The equivalent rates aren’t terrible and it looks like you can still use them as long as you have a UK bank account and wherever you are doesn’t have a local law restricting you. Thank you, will check this out!
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Jun 19, 2023 12:45
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So, like a lot of people I'm concerned about my upcoming (February 2024) mortgage renewal. Currently we're paying about £500pcm (actual requirement is £484 but we've done £500 for neatness and to chip away at the capital slowly.) By the time it's due we'll have about £127500 and 30 years left on the current mortgage, on a property worth about £200k (not had it valued since buying it for £165k four and a half years ago but conservative Zoopla estimates etc.) The bit that makes it interesting is that as long as the legal stuff is all sorted out in time I stand to inherit £50k from my grandparents before I have to renew the mortgage. Initially we were hoping to use that to buy a new, larger house but with mortgage rates going the way they are I'm not sure that's going to be possible. Instead I'm looking at paying off a big chunk of the capital so that we can hopefully keep our repayments at a similar value to now (or maybe even bring them down and shorten the term too.) My thinking is that the money will still be there if/when we want to move in the future, it's just tied to the house instead of sitting in some investment account or other. Just as long as house prices don't crater... but even if they do then at least we'll be less likely to be stuck in negative equity. And in the meantime we can minimise our outgoings, or at least stop them spiralling. We'll be coming off a very fortuitous energy fix in October too, so that's going to be painful even before we hit the new mortgage. A quick look on Money Supermarket suggests that renewing on our current level is going to cost a minimum of £150pcm extra (maybe more after yesterday's hike) or by paying off £50k we could either take ten years off the term and keep the repayments at £500pcm or leave the term the same and pay £100pcm less. Is that smart or dumb, or just sort of a "personal approach to risk" choice. sebzilla fucked around with this message at 12:06 on Jun 23, 2023 |
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Jun 23, 2023 11:57
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sebzilla posted:Is that smart or dumb, or just sort of a "personal approach to risk" choice. I’d say it’s just a sort of personal approach to risk ultimately, although the increase in rates have certainly made the appeal of mortgage repayments vs investments a much closer choice. Investments would still historically edge it out long term, but it comes down to what you want out of it really. One thing I’d say though is to not reduce the term, since having a longer term gives you more flexibility. For example, instead of a term that would result in a £500 per month payment, take one that has a £400 one, overpay by £100 if you want in order to have a short effective term, but be able to stop overpaying if you need the money or a better option for returns comes along.
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Jun 23, 2023 17:04
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Hobo posted:I’d say it’s just a sort of personal approach to risk ultimately, although the increase in rates have certainly made the appeal of mortgage repayments vs investments a much closer choice. Investments would still historically edge it out long term, but it comes down to what you want out of it really. One thing I’d say though is to not reduce the term, since having a longer term gives you more flexibility. For example, instead of a term that would result in a £500 per month payment, take one that has a £400 one, overpay by £100 if you want in order to have a short effective term, but be able to stop overpaying if you need the money or a better option for returns comes along. Thanks, the second part of that in particular makes a lot of sense. Although would the rate be lower on say a 20 year mortgage compared to a 30 year one for the same value, so even if I did overpay by £100 it wouldn't quite equal the 20 year rate? Either way the flexibility is probably still good. The reason for preferring paying off the mortgage to an investment is really all about the monthly budget. I might theoretically gain more in absolute terms from an investment but if I have to keep pulling that growth out to pay the bigger mortgage rate it won't work out.
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Jun 23, 2023 21:50
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sebzilla posted:Thanks, the second part of that in particular makes a lot of sense. Although would the rate be lower on say a 20 year mortgage compared to a 30 year one for the same value, so even if I did overpay by £100 it wouldn't quite equal the 20 year rate? Either way the flexibility is probably still good. The rate would probably be the same, I think the max term length tends to be more affected by your age (and therefore potential retirement date) than anything else. In theory the bank makes more money with the longer term as you pay interest for more years, but that’s assuming you just do the minimum payments for that whole duration. It’s not worth going for a higher rate to get the longer term though - I’d get the best rate I can for whatever initial number of years I’d want to fix, then ask the bank for the longest possible term on that mortgage. The only other down side you might run into is if the amount you’d want to overpay is more than the overpayment limit, but given the limit is generally 10% of the outstanding amount per year, you’d need to overpay by quite a lot to hit that.
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Jun 24, 2023 00:19
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Anyone have any recommendations for smartphone finance apps that are good at tracking index funds? I have looked at a few but it seems very difficult to find the funds I have shares in (an L&G global tech fund, and one of the Vanguard UK lifestrategy funds). Which seems weird to me but then again maybe most people don't track these things that closely. I would just like to have something that I can quickly check to see how my funds are doing - my online broker doesn't have an app and it's a bit of a PITA to go through their website's security each time.
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Jun 27, 2023 12:24
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El Grillo posted:Anyone have any recommendations for smartphone finance apps that are good at tracking index funds? I have looked at a few but it seems very difficult to find the funds I have shares in (an L&G global tech fund, and one of the Vanguard UK lifestrategy funds). Which seems weird to me but then again maybe most people don't track these things that closely. I would just like to have something that I can quickly check to see how my funds are doing - my online broker doesn't have an app and it's a bit of a PITA to go through their website's security each time. I just have a google sheet and use the googlefinance function, which works well for ETF funds. Though that might not work for the funds you've listed which look like unit trusts/OEICS? So they wouldn't be listed on an exchange. HappyCamperGL fucked around with this message at 13:03 on Jun 27, 2023 |
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Jun 27, 2023 13:00
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https://www.youtube.com/watch?v=e6hg6aLZSzw he looks like a bitcoin scam shill, but he’s actually pretty sensible. An interesting video on the mortgage stuff, with some interesting observations such as 100,000 people are looking to remortgage each month, which is just an awful situation to be in
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Jun 27, 2023 13:42
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What the gently caress is that accent
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Jun 27, 2023 14:15
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Mega Comrade posted:What the gently caress is that accent Irish.  edit: not all of us follow the media stereotype.
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Jun 27, 2023 14:22
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Where in Ireland though. It's a weird posh kinda Irish that also has an extended drawl on it.
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Jun 27, 2023 14:23
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Mega Comrade posted:Where in Ireland though. It's a weird posh kinda Irish that also has an extended drawl on it. Of that i have no accurate idea, think it's a cultured Dublin accent but i'm just a culchie from Co. Antrim.
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Jun 27, 2023 14:25
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Jel Shaker posted:https://www.youtube.com/watch?v=e6hg6aLZSzw I thought this was pretty good. Thanks for sharing.
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Jun 27, 2023 15:52
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El Grillo posted:Anyone have any recommendations for smartphone finance apps that are good at tracking index funds? I have looked at a few but it seems very difficult to find the funds I have shares in (an L&G global tech fund, and one of the Vanguard UK lifestrategy funds). Which seems weird to me but then again maybe most people don't track these things that closely. I would just like to have something that I can quickly check to see how my funds are doing - my online broker doesn't have an app and it's a bit of a PITA to go through their website's security each time. Im prob missing something but I use the listing on the ft and also the stocks iphone app to see whether my funds are zigging or zagging on that particular day op
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Jun 27, 2023 20:38
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Isn't the go-to advice usually to not look at your index fund daily/often since it's such a long term investment?
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Jun 27, 2023 20:57
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ah but that was in the days when zero interest rates made index funds the only sane place to stash your cash! with 7 wobbly firms propping up the top 500 its time to pull out itpo
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Jun 27, 2023 23:12
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HappyCamperGL posted:I just have a google sheet and use the googlefinance function, which works well for ETF funds. Though that might not work for the funds you've listed which look like unit trusts/OEICS? So they wouldn't be listed on an exchange. I do the same, though worth noting that the googlefinance function conks out all the time. It's not your spreadsheet that's wrong, it's ~google development~. Also consider a backup for when they inevitable shutter Google Finance, Google Sheets, Google Drive...
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Jun 28, 2023 07:45
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There's a very good desktop app called Portfolio Performance which is made by some Germans. However it can require a fair amount of data input. https://www.portfolio-performance.info/en/ It is, however, good at (approximately) tracking a lot of different accounts under (potentially) many different owners in one place.
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Jun 28, 2023 10:36
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Thanks for the responses. I think FT was the only one I'd found that would do what I was looking for, it's a shame they (I think?) don't have an app. Will sort out my profile on their website and hopefully that will do the trick. If not I'll look at google
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Jun 28, 2023 14:38
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El Grillo posted:Thanks for the responses. I think FT was the only one I'd found that would do what I was looking for, it's a shame they (I think?) don't have an app. Will sort out my profile on their website and hopefully that will do the trick. If not I'll look at google They have an app now. They used to have an extremely well made website for mobile that you could bookmark on your Home Screen which acted a lot like an app, but now they’ve gone to an app. Incidentally, I believe the reason for this was that they didn’t want to pay 30% of all subscription purchases through the app to Apple, so I’m not sure how that was resolved.
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Jun 29, 2023 08:09
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What is the generic savings/investing advice when an economy is doing as poo poo as the U.K. is right now - particularly high inflation and an ever looming risk of recession? With inflation where it is, equity markets doing what they are doing (FTSE100 closing at lowest point of the year), house prices decreasing at their fastest rate in over a decade, and banks not passing on the BOE base rate increases to savers, is there anywhere “safe-ish” to keep money/invest that doesn’t result in getting relatively poorer? I’m not trying to get rich, I’d just like to not fall behind even more. It feels like the whole power of compounding thing doesn’t work when costs compound faster than what can be saved.
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Jul 7, 2023 10:08
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Halisnacks posted:What is the generic savings/investing advice when an economy is doing as poo poo as the U.K. is right now - particularly high inflation and an ever looming risk of recession? I don't think there is any way of doing that in the UK at present. I am not a financial adviser so this is my humble personal opinion: the best you can do at the moment if you have a low appetite for risk (which I sense is the case) is find the highest paying interest or profit (for sharia accounts where I put my savings these days) account that you can and stash your cash in there. There are accounts at around 4% for 'easy access' or up to 6% for one year fixes available (a bit less in cash ISAs). If you have a higher appetite for risk, a tanking stock market is supposedly the best time to pick up stocks going cheap but a fund might be better with a bag of stocks in it rather than a specific company's stocks. I do keep getting emails about investing in barrels of whisky or rum which I delete immediately but you might want to look into other vehicles whether it is spirits, wines, art or whatever. Also look into SIPP as govt will add 25% to whatever you put in- eg if you put in £2880 govt will add £720. (there are various rules / limits etc) and the 25% is a one off and you can't take money out until you're 55 increasing to 57 soon and 25% on withdrawal is tax free but the other is taxable and how much tax you pay on it depends on your various tax codes and once you start withdrawing depending on the vehicle you use it can affect limits going forward. Again, am not a financial adviser so look in to it carefully if you think it might be something you want to do. Jaeluni Asjil fucked around with this message at 10:40 on Jul 7, 2023 |
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Jul 7, 2023 10:28
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Generic savings advice is to always invest in funds as they're cheap and have previously captured most of the value of equities. Equities have been the best performing asset class over the long term including particularly bad times. If the market is poo poo then it means companies are cheap so there's not much of a reason to not buy them now. It looks bad, but is potentially a winning move. If you don't want equities then buy gold, silver, property, and other things that people - mostly governments - can't water down. Buy poo poo that can't be replicated and its nominal price will increase and stop that falling behind. Fun fact, average price of a UK house in 1970 was ~200oz of gold, in 2023 it's once again about 200oz of gold. Gold fits the use case you've described as a value store, albeit not always consistent depending on property bubbles and the like https://www.bullionbypost.co.uk/index/gold/gold-real-estate-ratio/
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Jul 7, 2023 10:32
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If you are saving for a short term goal or emergency fund then cash saving account rates now are better than they've been for 15 years or so (despite inflation eating away at them, the bank of england want you to save and not spend money so as inflation falls these rates should recover the lost value) If you are investing for the long term then a low fee global market tracker is always the best place to put your money for a long term return (because even if the stocks lose 60-90% of their present day value you shouldn't be selling them for 10-30 years which gives the index time to recover and outpace its last all time high, as such a case was between the pandemic fall in March 2020 and the subsequent rally)
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Jul 7, 2023 10:48
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Thank you both - I’ll look into sharia accounts and commodities (both things I haven’t explored before). I’ve got a fair amount tied up in low-cost funds for equities, and I am oriented to the long-term, but they are definitely performing badly over the last couple of years. Again I’m not looking to get wealthy, I’d be satisfied with maintaining where I am in real terms. Inflation makes that incredibly tricky. I’m also trying to wrap my head around the theory of time value of money, inflation rates, and interest rates / rates of return. £1 today is worth more than £1 a year from now due to inflation, but when returns are > than inflation you get compensated in real terms for delaying your spending. When returns are < than inflation, you get penalised in real terms for delaying spending - isn’t the theoretical “rational” (ie utility maximising) thing to do to spend more now rather than later? Not something I’m planning to do, but to me “rational” answer being clearly irrational drives the point home about how hosed up the macroeconomy is.
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Jul 7, 2023 10:55
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-posting in a more relevant thread as I'm looking for general advice, not UK specific-
Qubee fucked around with this message at 15:03 on Jul 7, 2023 |
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Jul 7, 2023 13:01
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Halisnacks posted:What is the generic savings/investing advice when an economy is doing as poo poo as the U.K. is right now - particularly high inflation and an ever looming risk of recession? There is no magic bullet but what you can do is stick your money in funds invested outside the UK. I have a UK SIPP that I contributed to for several years and while I no longer live in the UK the money has to stay in that account. I decided a while ago that for the time being I wanted to try and shield the money from the UK economic situation. I have a big slice of that pension invested in "Legal and General International Index Trust Class C - Acc" which is a global tracker fund without UK and has a 0.08% expense ratio. I also have money in "Vanguard US Equity Index- Acc" which has a 0.10% expense ratio. Realistically these things are heavily US weighted anyway due to the size of their economy.
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Jul 7, 2023 14:28
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There's only so much you can do. A good chunk of the FTSE100 is shielded from the UK situation as they're objectively international businesses (Rio Tinto, RB, Rolls Royce, Imperial Branches, etc). Some of those companies are trading at less than 10 p/e (eg. Imperial Brands). That's historically a steal. When or does the market eventually recognise that so you can collect your scalps? You can get a taster with an 8%+ dividend next month. If you're investing in "safe" US investments you're paying double the price if not more. loving nonsense like Nvidia is running at 200+ p/e. If you want to invest in the future then you're probably looking outside the west entirely to places like Hungary, Poland, Korea, Indonesia, etc. Then you pick your level of engagement.
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Jul 11, 2023 07:54
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Halisnacks posted:What is the generic savings/investing advice when an economy is doing as poo poo as the U.K. is right now - particularly high inflation and an ever looming risk of recession? you said safe-ish so id lock away in a savings account at 6%
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Jul 11, 2023 12:15
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Does anyone know of a good place to go if I want a loan while I'm on a zero hour contract?
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Jul 17, 2023 15:49
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Breath Ray posted:you said safe-ish so id lock away in a savings account at 6% What are the best options now for high interest savings accounts? My wife and I currently are looking to switch banks and I'd like to park our prospective house down payment in an account to keep it from losing as much value as possible until we can realistically buy sometime next year. Also, is there a good guide to UK credit cards? I'm a foreigner to the UK who recently switched to a permanent contract at my job and got a raise, so I'm looking to finally get my finances in order and begin accruing some financial benefits from spending money (I have no debt FYI).
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Aug 6, 2023 14:05
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