To Fix or Not to Fix - Skipton International Asks the Eternal Mortgage Question

ST PETER PORT, Guernsey, May 12, 2010 /PRNewswire/ -- With the UK political landscape in a constant state of flux at present and the threat of ever higher interest rates hanging over the economy, this is the question of the moment. If you are currently buying a house, you need to consider whether to opt for a fixed rate mortgage or if you have an existing loan, should you remortgage and fix the rate to protect yourself against future rises? Nigel Pascoe, Director of Lending at Skipton International (website http://www.skiptoninternational.com) feels that, "Ultimately it will be a personal decision based not only on the competitiveness of the fixed rate on offer, but also the peace of mind having a guaranteed rate brings"

If you feel uncertain about the general direction of interest rates, you are in good company. Even the City of London, which makes a living out of forecasting movements in share and interest rates, accepts that forecasting interest rate rises is one of the most difficult things to do. Unlike company share prices, there is far less tangible research available which can help to narrow the probabilities.

Many people try to fix their mortgage rates when they feel uncertain or don't know enough about the future cost of their mortgage. Thus when rates are already rising or the press is talking up further rises, the demand for fixed rate loans increases. Ironically, by then it can be one of the worst times to fix a mortgage loan rate, as the products offered by banks and building societies will reflect the expectation of more upward rates movements over the short term. Happily, rates have not yet started to rise.

    With UK Base Rates at 0.5% and fixed rate costs (
http://www.skiptoninternational.com/pdf/SIL_MortgageCustomer.pdf) at around
3.99% over two years and tracker rates
(http://www.skiptoninternational.com/pdf/SIL_MortgageCustomer.pdf) at 3.19%,
the cost of either a variable rate tracker loan or a fixed loan is finely
balanced at present. Even 5 year fixed mortgages
(http://www.skiptoninternational.com/pdf/SIL_MortgageCustomer.pdf) can be
secured for as little as 4.49%, providing further stability for the medium
term. So if like many commentators you think the next move in rates will be
up, fixing your mortgage costs now could be a wise move.

Opting for a fixed rate loan brings a certainty to your budgeting. With house prices stable at present and mortgages representing a significant part if not most of your take home pay, any rate rise is likely to have a marked effect on disposable income. Switching to a fixed rate allows you to take stock and budget much more effectively, providing a certain level of protection even if rates do rise.

Nigel Pascoe ends, "Here at Skipton International, we pride ourselves on the fact that with our commitment to personal service, we take the time to ensure each buyer understands the loan they have and that it is the right loan for them."

For further information on Skipton International's complete mortgage range call 730 730 or visit http://www.skiptoninternational.com.

Editor's notes:

1. Skipton International Limited (SIL) will lend on residential properties in Guernsey, Jersey and Alderney and the criteria on maximum loan to value is as follows:

Next Generation Mortgage with third party security guarantee - 100%

Standard variable rate loans, fixed are loans, base rate tracker - residential only - up to 90%

Buy to let, base rate tracker residential - up to 80%

The maximum term is 25 years.

2. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and added each year.

3. Skipton International Limited (SIL) is a wholly owned subsidiary of Skipton Building Society (SBS), the UK's 4th largest building society with over GBP15 billion assets.

4. SIL is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 1994, as amended.

5. Skipton Building Society has given an undertaking agreeing to discharge the liabilities of SIL in so far as SIL is unable to discharge them out of it own assets and whilst SIL remains a subsidiary of Skipton Building Society.

6. As a Licensed Bank in Guernsey, Skipton International Limited is a participant in the Guernsey Banking Deposit Compensation Scheme (the "Scheme") established by The Banking Deposit Compensation Scheme (Bailiwick of Guernsey) Ordinance, 2008 (the "Ordinance"). The following is a brief summary of the Scheme, but is not intended as a substitute for the actual wording of the Ordinance, a copy of which is available on request.

    - The Scheme only applies to 'qualifying deposits', which
      broadly means deposits made by natural persons for their own benefit;
      with a few limited exceptions such as, for example, deposits made by
      trustees of retirement annuity trust schemes, the Scheme does not apply
      to companies, trusts, partnerships or charities.
    - The Scheme will provide compensation in the event that a
      Licensed Bank is unable to repay its depositors. Under normal
      circumstances, payment will be made within 3 months of receipt of a
      valid claim form.
    - Compensation is limited to a maximum of GBP50,000 per
      individual claimant; in the case of a joint account each depositor
      would be entitled.
    - Total Scheme compensation in any five year period is limited
      to GBP100 million. If claims exceed this cap, compensation would be
      reduced pro rata. The cap also means that compensation in respect of
      any one bank cannot exceed GBP100 million.
    - The amount payable may be reduced if the Bank has any
      contractual right of set-off against the account. The Scheme is
      entitled to recover compensation from any funds subsequently paid out
      by the Bank.
    - Further information and a leaflet about the Scheme is available at:
      Website: http://www.dcs.gg
      Telephone: +44(0)1481-722756
      Post: P.O. Box 380, St Peter Port, GY1 3FY

7. Deposits made with SIL are not covered by the Financial Services Compensation Scheme established under the UK Financial Services and Markets Act 2000.

8. SIL places funds with SBS and thus its financial standing is linked to SBS. Publicly available information, including reports and accounts, is available from http://www.skipton.co.uk.

    9. Copies of the latest SIL audited accounts are available on request.

    Media contacts: Please contact:
    Guy Stephenson/Jennifer Duffy
    Nacelle Limited
    Tel: +44(0)20-8333-9125
         +44(0)7980-241-558
    E-mail: [email protected]

SOURCE Skipton International