Been offered 3.78% fixed for two years, good idea or not?

Slightly better available, but the fixes are at a record low at the moment. Any set up fees to take into account?

its fee free, just what Nationwide said, going to see an independant guy tomorrow. would I be right in thinking intrest rates are likely to rise soon, news just said inflation has gone up again.

Maybe a quarter to half of one percent before year out at the most.
Work out the fee cost in balance to the cost of a higher fixed rate with no fees. Sometimes the lower rate is worse when you figure out the cost of the fee, but then again if you can afford the fee now and need the lower rate for the next couple of years then dive in.

its fee free, there is a lower rate but it has a fee, not a lot in it. Have sprog on way so it seems like a good idea to fix it. Just interested on any informed views on interest rates will do.

"Maybe a quarter to half of one percent before year out at the most."

Whats this view based on?

If you're staying at your current house I'd go for the 3 yr nationwide deal, it's slightly more expensive but not a lot. Only checked myself on Friday. Be aware tho rates and deals change weekly and sometimes daily.

'Whats the view based on?'

inflation figures out today show that cost of living is rising and any immediate interest rate rises would only stifle public spending further as everyone will have to spend more on mortgages etc and less on high st, new cars etc etc. Interest rate rises will cost business and public more and mean they grow more slowly(or don't grow at all) and spend less. Just look at recent bank finance results, low rates hasn't stopped them turning very big profits.

That, and a while selling mortgages for a bank.

EDIT Wrighty's right, deals get pulled quick so if you see something that works for you financaly don't hang around

My bet would be interest rates will climb significantly over the next couple of years. I am seriously considering remortgaging with a fixed rate from my variable. 'tis only a guess tho really

seems fair, just a bit twitchy given Tories in power now and rates wont need to rise much for payments to go up. Given I'm a natural worrier I reckon a two year fix seems good. Hopefully might be thinking of moving in two years time.

Put it this way, rates are not going to go down are they?

Dont think interest rates will rise in the next few months. The economy is still weak, and there is the expected rise in VAT to come which will keep inflation in check.

If you've got a kid on the way, it seems to make sense to fix it to give you more certainty/stability. You'll have enough to think about when the little one arrives.

grab it!

HSBC are offering 2.29% if you're only after 70% of the valued price. That's fixed for 2 years.

just a bit twitchy given Tories in power now and rates wont need to rise much for payments to go up

BoE set base rates, not the Tories. Unless they reverse GB's policy, of course.

Given that base rates are what, 0.5% ? They can only go 2 ways… static for a bit, then up, or just up. If it were me, and I wanted stability, I'd be trying to fix them for as low and long as possible.

3.78% seems high to me, with base rates that low, seeing as mine was fixed for 10 yrs at that price a few years back (before freddie mac / fanny mae **** hit the fan). Maybe just € vs £, LTV that creates such a discrepancy?

i've just went through this exercise too – we still only have < 10% equity having bought at the peak of the market 🙁

Went from a fixed rate of 6.2% to the current variable at about 3.5%, and are overpaying the difference from what we were paying on the fixed rate. I've decided to stay with the variable for the forseeable future, because we have no equity the fixed rate deals available are pish and the fees are astronomical (£1000!) which would be added to the mortgage. So it worked out about 20 quid a month more to fix and we're not getting the benefit of overpaying with that.

I agree that if interest rates do rise, it will not be by more that 1/4 or 1/2 a percent, as a jump greater than that would have a big impact.

Basically the best thing to do is work out how much you can afford just now, overpay if possible to get the capital value of the loan down, and watch for the interest rate rising to the point where it would start to cost you more, then fix. Of course the downside of that is that the banks will be one step ahead so will likely make sure the best deals are long gone before it starts to bite…

tough call.

Hmm I'd be surprised if interest rates climb much, the bank of england are still sabre rattling about how we are not out of the woods yet.

Fixing you rate is like gambling in a casino. The house always wins. They have a much better grasp of what interest rates are likely to do than you or I. They employ lots of clever economists to work this out. Ok they may get it wrong from time to time but are you more likely to get it right? I would always go for the cheapest variable rate if you are thinking any longer than 5 years.

Fixing you rate is like gambling in a casino. The house always wins.

Yes but that depends on your attitude to risk – occasionally you lose big time by not fixing and the results can be destructive. I have never fixed though as the likelihood of me not being able to deal with interest rate rises is low I think; so far worked out well for me over the last 14 years.

Yes but that depends on your attitude to risk – occasionally you lose big time by not fixing and the results can be destructive

Only in the short term. Yeah if you cant cope with the fluctuation then fixing may well be better. Motley fool did a study of fixed rate deals offered over a ten year period I think it was 1995 -2005 and found that they all cost more than comparative variables over the ten year period.
I'll find the link.