Fixed rate mortgages

My current fixed mortgage comes to an end in August, so I'll need to start looking too.

It's always a trade-off of the stability of a fix versus variable rate. The risk would be that you fix at a high rate and then it drops, but nobody has a crystal ball.

We bought in 2010 and fixed for 5. Then that expired and we fixed for 10. Why?

I'm incredibly risk averse and the rate was super low so could only really go one way. We also wanted the security of a fixed monthly payment for a long period so we could have options on what our commitments required work wise.

It was a great decision in hindsight and I'd do it again BUT that's our outlook and everyone's circumstances vary.

We cleared the mortgage in September last year and should we ever decide to get another one I think I'll follow the same strategy if conditions are similar.

We cleared the mortgage in September last year

Nice!

Only you can decide based on your circumstances and what you are offered.

Generally the more years you fix the more it will cost you and the more tied in you will be. Also in my non expert opinion having being a home owner for a while, the more unstable the market, the more it will cost you to get that fixed term.

We got a fixed rate 5 yr deal just before Liz Truss came in and screwed everything up, so for now we are lucky as in not paying too much apr and it didnt cost too much. Fixed rate deals are now more expensive to buy let alone the apr.

I recon in a couple of years rates will have stabilised / start to come down... but I know nothing.

Of course Labour could get in to power and screw things up further

Thanks for the replies,

I recon in a couple of years rates will have stabilised / start to come down… but I know nothing.

this is exactly where I am and hoping that in a couple of years the interest rates will start to come back down but who knows. I have to admit it never crossed my mind that Labour might screw things up further ... god thats a depressing though.

Of course Labour could get in to power and screw things up further

Highly unlikely. Truss and Kwarteng were peak idiocy and unlikely to ever be beaten.

As for fixing, we must be very close to peak interest rates (in this cycle), so an expensive time to fix.

From what ive read, there is discussion about probably another one to three 0.25% rises to come, inflation is still high and regardless of what you think the BoE should do, interest rates are their blunt tool to combat that (Demand destruction and the resultant job losses are felt acceptable)

Because of the lagging factor of IRs feeding through, 'they' reckon that rates will lower back down to the 3.5-4% range and stabilise. 'they' are talking about 12-18 months for the increase and resultant decrease.

As footflaps says, you'll likely be fixing near the top of the cycle.

Ive read somewhere that perhaps a tracker is the way to go.

No one has a crystal ball.

im not a financial advisor and FYI i dont have a mortgage either so no 'skin in the game'.

If it is going to take that long to come back down then a 2 year fix isn’t really locking in the peak for much longer.

2 years probably ok, anything longer and you'll be paying more than you need to.

Agreed, my fix finishes in July. Will either be a tracker or a 2 year fix, doubt there will be much between them by the end.

Thanks again for the replies

2 years probably ok, anything longer and you’ll be paying more than you need to.

This is what im thinking at the moment and will probably end up with a 2 year fixed so that I know whats happening moneywise month to month and then see whats happening in a couple of years time.

Thanks again

we just came out of a fixed and have plumbed for a base rate tracker, the logic being A) Fixed rates are really high (although they've dropped from when we had to rearrange) B) didn't want to be stuck in that high rate when the base rate strats to ease off. To qualify that, I stress tested our finances all the way up to 8% base rate, there's no early redemption fees, and there's no overpayment limit on our tracker mortgage - so if cheap fixed rates come back on the market, we can switch if we want the stability back. FYI, we are currently paying 0.1% more than our lenders current best fixed rate, but paying .5% less than the fixed rate available from them at the time.

Usually the longer the fix, the higher the rate - but when I looked the other week, 5 and 10 year fix were about the same as a 2 or 3. I take that as the banks expecting interest rates to drop in the next couple of years.

Of course Labour could get in to power and screw things up further

And still they vote Tory.

Highest inflation in my working life
Doubled the National Debt, before Covid, and now nearly tripled it
Highest taxes since the 50's
Longest NHS waiting lists in living memory

But Labour!

Anyway, back on topic - the only concern I have with fixing is that you're "betting" AND you're charged a premium - but only you can decide if it's worth it.

Hey! Interested as would have written exactly the same thing.

So there does seem to be alot of variability and wide spread of offers out there (if you have a good LTV ratio)

Best I have found on below 50% LTV on a 5 year fix is with barclays (surprisingly) at 3.84% with a random £794 product fee. Virgin offering 3.74 but with 1500 squid setup fee.

I am currently thinking of the 5 year fix for stability and hope things settle down but rates would have to drop by at least 0.7% at the end of the 2 year fix (comparing to the extra 3 years) to compensate for the higher rate on the 2 year fix (4.1%). If that makes any sense! Spreadsheets rule here to plug in the numbers and the random generator on predicted rates.

Its all a gamble and very difficult decision 🙁