Mortgage - would you fix for 2, or 3 years today?

If it was me doing it today I think I'd go for 3 years.  But then I'm dead cautious and I like stability - easy to work money out if you know how much your mortgage is costing you to the penny for years to come.

It hasn't always worked in my favour but yes, you're welcome, we're fixed at 1.39% until 2026 😉

All depends what the charge is, if any, for the fixed deal.  I gave up on fixed deals as the charges were often around £1000 which made the slightly better rate no better over the few years when spreading the £1000 across it.

The UK economists are predicting that interest rates have probably peaked and are likely to start falling in Q4 or maybe Q1 2024

In the US the mortgage markets are still really struggling and even the most optimistic economists are now shying away from the prediction of steep V-shaped recession with a recovery starting in early Q3. I reckon the recovery will be flatter starting towards the end of the year in the US followed here 3-6 months later.  A rapid conclusion to the Ukraine conflict will help everyone but that appears unlikely too, hence volatility will remain in the markets. How you measure that and predict the impact is another question.

In simple terms I reckon 2years

Cheers all,

No fee to fix, looking at 4.49% on 2 year, 4.38% on 3 year which equates to just over a fiver difference per month.

Interesting stuff @ElShalimo thanks

we just fixed for 5 yesterday as there its going to be a bumpy old ride for the next few years, even if we get a change in government at the next GE so at least we have fixed budget to work to. 5 year forecasts aren't looking great and although they are at best , a big old guess based on mystic meg like skills I'd still rather work on that, than a fingers crossed approach.

I would go 2 years on the grounds that locking yourself into a relatively high* mortgage rate for a longer period would frustrate if interest rates start to fall again. For £5 a month though I can appreciate the desire for stability if the monthly payments are affordable for you.

As you've already thanked me in advance it'd be rude not to tell you that I'm fixed at 1.03% until February 2027.

*high in terms of my personal adult experience anyway, given that I graduated juuuuust before the 2008 crash

I'm just about to go 2 years in the hope of the world sorting itself out to a slightly better place by then...

I should have gone for a 5yr fixed in 2021 but my twins turn 3 this year and with the free hours kicking in I was hoping to swap to something which would allow larger overpayments. Life is life

We paid ours off a few years ago.

😘

Sorry Tom but you'd have been disappointed if no one had said it.

No fee to fix, looking at 4.49% on 2 year, 4.38% on 3 year which equates to just over a fiver difference per month.

What are the early repayment charges then?
All things equal, I would pay a fiver a month to give me more stability and punt any more changes/fees into the future by a year.

Thanks again all*

What are the early repayment charges then?

It just says:

An Early Repayment Charge may have to be paid when:

You make an overpayment greater than your overpayment limit.
You switch products before your new deal ends – except during the final 3 months.
You only take part of your existing Nationwide mortgage with you to a new property.

*apart from Stu, you git 🤣

2. The market is already under pressure as rate increases are falling behind base rate increases because of lack of demand. House building in 2024 will fall to record lows prior to an election as the Tories capitulate to nimbyism wherever it can be found, which will add more pressure on rates as less supply means less mortgage demand.

Our mortgage was paid off a couple of years ago... 😎😎😎 🎉🎉🎉

...the wife bought a horse though which costs more to keep than the mortgage was!! 🐴🤷‍♂️😕

They are probably coming down, and the bank thinks that judging by with the lower rate for longer term... but... 15 years ago they were so low they were definitely going up, they then went down, and down, and down. As already mentioned 4.x is still a low rate and, IMO, if you spent your entire life on that rate you'd be doing well. I'd go for the 3 year deal. Not that much difference over the life of the mortgage and you have one extra year to not be worrying about it.

I'm fixed at 1.5% until 2040.....

I’d be going for as short as possible fix (although I’d probably take the chance of a tracker at the moment….)

Why lock yourself into a longer deal when rates are expected to reduce in the medium term?

I'd go for 3 as no one really knows what's going to happen and I can't see houses prices dropping. We may need loads of new homes but there is a complete lack of experienced trades due to lack of apprenticeships over past 10+ years.

The longer I live in Europe, the more gobsmacked I am that the concept of variable rate mortgages still exists.

Fixed at 1.5% for 20 years BTW.....

Same as Tazzy, we fixed for 5 years yesterday at 4%
Decided it could take ay least 18 months for rates to come down and the rate for 2 years meant paying a chunk more over the next 2 years than on the 5 year deal.
Decided I preferred the security of knowing than worry it goes up again in 2 years!

I did a 3 year fix Wednesday night. Standard variable is ludicrously high - they obviously don’t want you to take it (something over 7%).

Tracker rates weren’t really any better than fixed so for me I don’t see why I’d risk the variability of it (I’m risk averse).

2 year fixed was most expensive, then 3 year then 5 years. If I’d been on my own I’d have taken the 5 year at 3.89% for the stability but I knew my wife would have an eye on potentially decreasing rates over that term and want a bit more of a gamble.

Personally I’m not that optimistic rates are suddenly going to plunge in 2024 unless we have a massive recession - where base rate was before the recent rises wasn’t normal and I think people have forgotten that.

So I went down the middle on a 3 year fixed at 4.14% with a £1k fee. It was cheaper to take a fixed rate with a fee, than one without a fee - even if you rolled it into the mortgage instead of paying outright.

An optimist would say things will start moving in the right direction within two years, the realist in me would say 3-4 before you see any noticeable difference in the new fixes on offer.

I don't think a significant rise in rates can be justified in the short term, although the BoE seems to be struggling with basic economics at the moment (thinking that interest rate rises will tackle supply-side inflation). Hopefully the pressure to 'do something, anything' to meet the government's inflation promises will subside once the price of energy to the UK consumers starts to fall.

Obviously, history tells us that rates can get a LOT higher than that if the circumstances are right. Maybe you should hedge against further turbulence in the markets by going 3 or 4 years - at least you'll be able to budget then.

Thanks again all, we opted for the three year fixed, which means that the food news for the rest of you is interest rates will fall to below 1% next week...

I think there’s an equation of how long you can bear being unhappy paying more than if the mortgage rate goes down.

snip...no one really knows what’s going to happen and I can’t see houses prices dropping

+1 Who knows?
We might be heading for a financial crisis, regional banks in the US are still jittery after problems with Silicone Valley Bank and First Republic. The US debt ceiling has been reached, not helped by Russia's invasion of Ukraine, etc.
The US is winding up for presidential elections in 18 months, the UK a couple of months after that