Mortgages... 2 years or 5 years fixed?

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%....

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.

We just fixed for 5 years, I'm regretting not going for 10 already and the 5 year's hasn't even started yet! It was already ~12% more than we had been paying each month.

I think the plan now is to try and overpay it if we can so that it's less of a shock when it comes up in 5 years time then we can either cope with the increase and be paid off slightly early, or use that flexibility to pay less than the new amount each month if it's unaffordable.

Ours is a 2yr fixed at 1.69% starting in March this year. Should have taken the 5yr at the minimum, we've both just taken a huge pay cut to go term time working, not looking forward to re-mortgaging at all when it comes round.

We saw this coming a few months ago, took the penalty for early remortgaging and fixed for 10.

As long as possible.
That's what I would do if I still had a mortgage.

If OP hasn't already done it, I suspect he/she's now too late at the rates he's been offered. Lenders will be pulling products off the market today with BoE rate rise expected within days and further rises shortly afterwards.

There will be people trying to buy houses whose mortgage deals get withdrawn this week.

What an unholy mess.

EDIT: I see it's happening.

https://twitter.com/BruceReuters/status/1574420093206929409

There will be people trying to buy houses whose mortgage deals get withdrawn this week.

I've in-laws who agreed purchase of a 'forever' house on Friday. It's a stretch financially for them, and they've paid 20% over the asking price. Plus it's partly single glazed, 100 year old farm cottage...
They had thier house valued today. They've not investigated mortgages yet, just assumed they would get the same rate as they are currently on....

Oh dear.

Might be a blessing in disguise by the sounds of it. At least they haven't exchanged.

Hiya,

Is it time to say I have 1 year left of my mortgage. The interest rate is fixed too at 1.98% although I have one month over the deal for the final repayment, but can live with that, with the amount that would be left.

Seriously really feel for everyone at the moment. In 2008 we decided to pay off the mortgage off as soon as we could and thank god we did. It has been a rocky time as we are overpaying but at least at the end we have a moment of freedom and plenty of work years left to build up more savings.

BR
JeZ

My mortgage application meeting is at 6pm! Unless he can pull a 3.79% out of his hat then I'm out! Might as well start with that to prevent the pain of a full blown application

Just seen a tweet, Halifax are now withdrawing their mortgage products

I could go back to the vendors and get money off but I suspect it won't be enough

Might be some 'legacy' products around that building societies are still prepared to shift, you might be able to find one of those. Is it a broker, or a particular lender?

I think some forecasts are suggesting base rates close to 7% are coming, so unless you can fix for a decent period...

We just got in with a new five year fix before the rates went up. It wasn't cheap but I'm glad we did!

Urghh, my 5yr fix is up in Feb. Been lucky with low rates since I bought but always managed to be ending fixed terms just as rises were being talked up.

I don't see it lasting that long based on inflation predictions but maybe that's wishful thinking.

Just seen Virgin are asking nearly 7%. Wow.

Just fixed for 5 years at 1.5% higher than the 5 finishing at the end of November. Figured that was reasonable in the climate and still affordable as we have both changed jobs upward in the last 5 years. Will be interesting to see what it’s like in 4.5 years time.

At the beginning of may I signed up for a five year fixed rate at 1.96%. There will only be five years left on my mortgage when that runs out.
I’ve also got a fixed rate on my gas and electricity till July next year so all in all I think I’ve been quite lucky!

Great way to boost growth - stall the housing market completely!

UK lenders pause new mortgages amid market turmoil
Virgin Money and Skipton among those to suspend loans as wholesale rates whipsaw

https://www.ft.com/content/a549fabb-da75-4935-a567-7128b7b04b76

My mortgage application meeting is at 6pm! Unless he can pull a 3.79% out of his hat then I’m out! Might as well start with that to prevent the pain of a full blown application

Just seen a tweet, Halifax are now withdrawing their mortgage products

I could go back to the vendors and get money off but I suspect it won’t be enough

my mortgage advisor said that the deals he had lined up have been withdrawn today but the best one was at 4.5%. So can't wait to see what the new rates are.

I've asked my vendor for a reduction but to be honest even with that I might struggle. It looks like I'll have to wait and see. But at 45 years I just want to get back on the housing ladder. Shyte mate

I had my 2 yr fixed ending in May ‘23.

I got spooked a few weeks ago and took the hit on redemption penalty and went for a 5yr fixed at 3.28%…just under 70% LTV.

I’m glad I did; despite wiping out my savings on the penalty, I think that’ll pay for itself in a few months if it goes beyond 5%.

Tough times for many. I think rental prices will balloon too, though, so no one is safe unless you’re debt-free.

Rentals fixed in acotland. No rises allowed and wven when they are there are limits

Completing on a house next week, mortgage pulled today, offered another at 7.5%. Thankfully managed to find a way round it all but bloody hell what a mess.

Fixed mine for 5 years @ 1.75 about a month ago. Wish I'd gone for 10 now. I'll make overpayments to lessen the impact.
Got a feeling that houses prices may drop as the boomers begin dwindle.

Fixed in Feb for 7 years at 2.09% just lucky with timing really.

6 years left on my 10 year fixed at 1.6%. When that runs out only 3 years left and we are overpaying £700/mo to bring that down too. It’s better than savings - we can always take payment holidays if we need to access some of the cash.

@NZCol which provider was that with? We're due to complete in the next fortnight and I'm really concerned my 1.77% is going to mysteriously disappear.

We moved a few weeks ago, thankfully having fixed our deal at 1.95% a few months before for 10yrs. It would have been 3.5% for 5yrs by the time we moved and now the product isn't being offered. Find a good mortgage broker. Ours found us much better deals than we found ourselves! Happy to recommend if you're in the Bristol area.

Fixed until July 24. That no longer seems long enough..

Been trying to buy our first home for around a year now, and even with a hefty deposit we find ourselves still renting. Granted we are rather fussy in what we want so have been hanging on for the right thing.

Feeling totally disheartened by the rate increases and mortgages being pulled this week, so likely to be renting for the foreseeable.

https://www.msn.com/en-gb/money/other/the-good-news-is-the-pound-has-rallied-the-bad-news-is-why-ed-conway/ar-AA12gxp1

Sobering article, talking about how the headline interest rates now are not able to be directly compared to rates historically due to the differences in mortgage size to salary etc

69er_Gav: (someone far more knowledgeable will probably correct me in a minute but..) If people can't afford their mortgages then there will be a lot of houses on the market, so (hopefully for you) prices will start to fall soon.

@joeyr I think you could be right there, though folk still need to live somewhere so would that not put pressure on the value end of the market? Could be case of hanging on months and see what comes up.

On the other hand, feeling a little lucky not to have a mortgage up for renewal in the next few months. We know a few folk in this boat and they're feeling rather uneasy

Great way to boost growth – stall the housing market completely!

If it makes housing affordable for the youth I'm all for it. For clarity, we've nearly paid the mortgage off, I'm due to retire and I don't intend moving.

69er_Gav: (someone far more knowledgeable will probably correct me in a minute but..) If people can’t afford their mortgages then there will be a lot of houses on the market, so (hopefully for you) prices will start to fall soon.

I think if it happens at large enough scale to be noticable, there'll be intervention in place to help people out. This happened in 2007/2008 - there were very few reposessions compared to previous rounds of recession, so whilst prices dropped the whole negative equity/forced sale thing didn't seem to happen

Just had to bite down and receive a 4.3 for 5 years. Cheers Kwasi, Liz you pair of ****s.

We're selling MIL's house now after her death. Hopefully the buyers mortgage deal is now secure (should be) or we'll be back to square one. It's been empty 3 years, but the council want their care home fees.

Fortunately my mortgage was paid off a few years ago.

Just had to bite down and receive a 4.3 for 5 years. Cheers Kwasi, Liz you pair of ****.

I'd take that right now TBH, seriously.

We've just discovered that the buy out on the remaining year of our five year fix is prohibitively high, as in we'd essentially be charged way more than a years worth of mortgage payments to get out of a years worth of mortgage payments and fix at around 4%, which is basically like paying double overpayments, but without putting the appropriate dent in the capital sum (read the small print kids!)...

So we've got another year at 2% during which we're just going to go for max overpayments and then we're at the tender mercy of the BOE and Kwassi.

We can apparently get out 4 months early (by which time interest rates will already be well on their way up) but only if we take a new fix with the same provider, still the best path for us now is to try and squash the capital sum as much as we can, save wherever possible and brace for a stupid interest fix in a years time. By which point it's going to be the opposite game; how short a fix can we get so we're not stuck on a silly high rate when they do start to come down, or better yet start riding the variable rate rollercoaster...

Bastards.

We decided to renew with existing lenders on Friday - going from 1.95 to 3.75 over 5 years and the adviser said today that it’s confirmed. I am so relieved we didn’t opt to swap lenders (which would have only saved us around £750 over the five years) as I doubt we’d get close to that after completing all the additional paperwork we’d need to do to sort it.