Hey,

With the caveat that STW members don’t provide financial advice…

What would you do, lock in a 2 year mortgage with the risk of coming out of the fixed period when interest rates are still high, or lock in a fixed 5 year, with the risk of missing the lower interest rates to remortgage on?

I’ve been leaning toward a 5 year, as it’s gives us predictability that we can budget for, but we could miss out of 3 years of lower rates.

The best rates right now are just over 3%. And we have a high LTV and credit score.

Cheers!

Ricks

If you lock in the 5 year can you overpay to mitigate the interest charged by reducing the capital to offset any drop in rates?

I don’t think that interest rates will be down in 2 years let alone 5.
We just fixed for 10 years, the rate was only 0.2% higher than the 5 year fixed, and it gives me be a bit of peace of mind.

I’ve just fixed for five – the rate for a 2 year fix was only marginally better than the 3 and 5 year fixes which were identical. I took the opportunity to reduce the term at the same time.

Interest rates are only going one way at the moment

I think of be looking at 5 or 10 year fixes.
It’s a gamble as always but I can’t see rates being lower in only 2 years time.. So when you come out of that 2 year deal I suspect you’ll only be able to fix at a higher rate anyway.

When the shit hits the fan over the next 12 months rates will be on the way back down again for sure, may even go negative.

When the shit hits the fan over the next 12 months rates will be on the way back down again for sure, may even go negative.

I think you’re the first person I’ve actually seen who’s suggested that rates will be dropping in the next year. Everyone else seems to think we’re going the other way.

When the shit hits the fan over the next 12 months rates will be on the way back down again for sure, may even go negative.

I hope that’s the case but I doubt rates will come down this soon.

When the shit hits the fan over the next 12 months rates will be on the way back down again for sure, may even go negative.

Thing is, we’ve all got our crystal balls out and none of us know where it’s going!

You might be right and I’ll have fixed at 3% for 10 years, but that will only be 1-2% over the lowest rates the banks might be offering. I’m only paying £50 a month more than when rates were at 0.25%….and I now don’t have to stress about it for 10 years.

However, in your scenario, in 5 years time maybe the rates go up again, and up and up. So maybe I’ll come out ahead. Or maybe not. But at least I’m not going to worry about it 😉

Offft. 10 years. I’ve not even thought about going that far. I’m just just to paying 2%, and that was with a 80% LTV, we’re now at 60%, I suspect in five years that’ll be 50% LTV, maybe less. Which could mean a decent rate could be available. Or, rates could still be high – the BoE base rate is only one factor in mortgage rates, even if it’s low, banks could still keep the rates high to offset the lack of movement in the market as everyone is poorer.

We fixed for 5, but with also over paying and the knowledge that we can pay off a big chunk of it at the end of the fixed term

When the shit hits the fan over the next 12 months rates will be on the way back down again for sure, may even go negative.

I don’t disagree with this but it’s the timescale that i think could be debatable: in the near term increase interest rates to combat inflation (even though inflation is being caused by global issues rather than rampant spending), that gives some wiggle room on interest rates (given they didn’t have much aside going negative in the last few years) then, if the predicted recession hits and inflation is back under control, there’s room to drop interest rates to stimulate the economy.

In a 5 year fixed that started last autumn…We’ll see how it goes 😬

5 here

Any more recent thoughts/guesses on this?

My current deal end in a couple of months so looking to secure new rate now. I seem to be concentrating my thoughts on the 7yr & 10yr options I’ve been given at 3.18% and 3.05% respectively.

One thing you may be able to help me with is my mortgage is in 3 parts…all on the same rate and period but 3 mortgages non the less. Anyone know if I’ll have to pay 3 arrangement fees or whether I can move all 3 parts and only pay the arrangement fee once?

We fixed for 7 years in February and am now very glad we did. Massive incentive now to get it paid off in this time.

We still have 3 yrs left of what was a 5 yr fix @ 1.69%. I’ve been doing the sums on what rates of between 3.5% – 5.5% will look like for us.

If I were remortgaging now I’d be fixing for as long as possible. It’s going to be a bloodbath for lots of people whose deals expire after base rates hit 3 or 4%.

Very timely, I have literally just got off the phone from securing 7 years fixed at 3.49% with Barclays.
Had a bit of a tense weekend hoping the rates wouldn’t go up over the weekend until our “interview” to secure the offer.
It has an 3% Early Repayment Charge that’s fixed for the term so a bit of a hit if rates did drop suddenly and by enough to warrant a change again.
Was pretty much the best deal around and at a better rate that any 5 year I could find. We had several online brokers looking but still got the best deal direct to barclays.
I see it as a worse case scenario now for 7 years, if rates drop I will look to switch if and when the penalty is outweighed by the savings.

What are the Administration fees on mortgages at the moment? They used to be £1k so don’t forget that over the period of a 5 year deal you are only paying that once, rather than twice if you went for a 2 year. It eats into a lot of the saving unless you have already factored that it?

you should be able to combine all 3 parts into one, unless there’s a good reason they need to be 3 now.

for long fixes look at exist costs – I’ve seen a 10 year fix where to leave after 2 years (if you needed to move/financial position changes/etc) the fee would be close to 10% of the remaining mortgage.

I’d go 5. 2 year fix flashes by very, very quickly in my experience.

What are the Administration fees on mortgages at the moment?

At Barclays, they seem to range from £749, £999 and £1999 (if you’re borrowing £2m+)

for long fixes look at exist costs

5% for 10yr deal
3% for 7yr deal
2% for 3yr & 5yr
1% for 2yr

I’d port the mortgage if I moved so wouldn’t be liable anyway…just need to work out likelihood of divorce 🙂

5…. before you know it it will be March and you’ll only have 18 months left!

I forgot to add that our existing mortgage was in 2 parts and we combined it into one new one without issue.

5.

I’d get on with it if I were you. Those products probably won’t be available, or not at the same price, by the end of the week.

1 year ago I fixed at 1% for 5 years. The 10year deal was 1.5%. I’m kicking myself daily about this

But I was concerned about exit fees and in 10 years a lot can change.

I believe some nordic countries are negative interest, and japan, I thought negative interest rates maybe a possibility here. I thought smashing up the BoE base rate would be a really really stupid thing to do and highly unlikely given Covid etc…

How wrong I was.

I stress tested our mortgage at 7%. But. I didn’t factor the entire world going to shit and inflation being 10+% on top of base rate going up to around 5%. I am now quite worried what on earth is going to happen in 4 years from now,

Fix as long as possible.

We went 5years just before they started rising but Oct is the first payment at new rate. Glad we did. Can’t see getting much better deals than we have if it drops and insulated against rises.

im taking an interest in this thread. I’ve had an offer accepted on a house and the matter is now with solicitors. However, I’ve had the agreement in principle which was 5 year deal at 3.79 per cent.

Im due the mortgage application this evening with my advisor and we’ll see what he has to say but if the repayment is any worse than I’ve budgeted for (700 per month in my case) then I’ll have to pull out. Im thinking that if the housing market is due to crash then pulling out isn’t such a bad idea.

5 year fixed at those rates. Markets are predicting 5 or 6% later this year

I got a 5 year deal with my existing lender, I wish I’d shopped around for 10 now.

5 year fixed at those rates. Markets are predicting 5 or 6% later this year

Yes, Truss if off to a flying start, determined to demonstrate that she will do far more damage to the UK than Bojo….

im taking an interest in this thread

Boom boom

We fixed for 5 years at 1.17%, 13 months ago.
We’re over paying.
The issue we’ve got is that we put some money into S&S ISA’s, the idea being that we should see more than the 1.17% and therefore have more to pay down the mortgage in 4 years. But they are tanking at present. I’m really tempted over the next few months to try and lock some of it in to a fixed return.

(And to OP – get locked in asap in my view).

I’m in the middle of a 5 year fix around 2%.
Looked at pulling out and going again about 6 months ago, but exit fees meant it wasn’t worth it.

I suspect we’ll get rinsed in 2.5 years time, but who knows – they might invent a viable fusion reactor in that time and the oil price is suddenly irrelevant 🤣🤣

I’m in a similar situation.

Nothing available for less than 3.5% at the moment.

Nothing available for less than 3.5% at the moment.

After the recent budget statement and with more unfunded tax cuts on the way, interest rates are only going one way for the next few years….

We took a 5yr fixed at 2.09% wish started in July.
Am now debating if to stop the over payments and stick it in savings as the interest rate is likely higher in savings now.
Intention is to pay a large amount of it off at the end of this 5 years and see what the hell is going on with rates

I fixed earlier this year for 5 years. I wish I had gone for the 10 year option.

Glad we fixed for 10yrs now!

Nothing available for less than 3.5% at the moment.

And I’m betting by next week they are at 4-5%….