Fixed Rate 5 Year Mortgage - A Terrible Mistake?

monkeymaster

audioblackout wrote: »

Hi guys,

After reading on here two weeks ago about things in the economy going belly up, and panicking a bit when the banking bail out couldn't be reached in the US, I quickly took out a 5 year fixed Mortgage @ 5.89% with Halifax.

Now it seems like after an interest rate cut, and now a small 0.15% libor cut, and the banks having loads of money pumped into them, I'm starting to wonder if I was wrong to do this.

And now there's talk of even more interest rate cuts to stimulate the ecomony.

Kind of thinking right now I made a panic judgement that will leave me seriously out of pocket, especially if I'm going to have less money to pay out due to the 'recession'....

Does anyone have any thoughts on this? Would be much apppreciated so I can sleep at night!!!!

I think the base rate will be at or below 4% within a year but you've fixed for 5 years not just 1. It's possible that the powers that be decide that they'd rather see high inflation than deflation and flood the economy with money (as they have been doing), higher inflation usually equals higher interest rates and they could be 8, 9 or even 10% in 3 or 4 years. For what it's worth I think you made the right choice - if I was buying today I'd certainly be fixing my mortgage for 5 years at least. Remember interest rates are still really low in historical terms!

Dave.johnson

Patience is the only thing that will pay dividends in your situation. You may end up paying more but if you couldn't afford it, you wouldn't have gotten the fixed rate to start with. You may end up smiling in the end. The global problems we have seen won't be sorted in five years. They may take a hell of a lot longer. Fix your rate! Thats always been my advice and now is no different.

whu

beecher wrote: »

I've taken out a 5 year fix, and am glad of it. I wanted security and to know how much I'm going to be paying out - who knows what kind of state the economy is going to be in over the next 5 years and where interest rates will be at the end of it. Best to just forget about your mortgage for 5 years and be thankful you're able to - there's plenty of other stuff in life to lose sleep over.[/quote
I agree with this - I also took out a 5 year fixed earlier in the year and at least I know/can budget for my payments for the next 5 years- you made the choice that was best for you at the time so rest easy

pro_bono

Hi,
I thought I would add my thoughts, we fixed 10 years ago @6.95% and were happy to do so. Just as Bog Brush did we remembered interest rates at 15% and having to find a way to pay them, hard times indeed! Now the term and the mortgage is almost at an end, I have no regrets in having paid over the odds, for the peace of mind it has given me.

woozywendy

pro_bono wrote: »

Hi,
I thought I would add my thoughts, we fixed 10 years ago @6.95% and were happy to do so. Just as Bog Brush did we remembered interest rates at 15% and having to find a way to pay them, hard times indeed! Now the term and the mortgage is almost at an end, I have no regrets in having paid over the odds, for the peace of mind it has given me.

We did the same 9 years ago (have 1 more left) and it has given us peace of mind in all that time. We knew exactly what we had going out every month. Our mortgage was fixed at 5.99% and I hope we can get something about the same next year when we remortgage.

knuckledragger

I've got just under 3 years left of a 5yr 4.99% fix. I'm happy just knowing that my repayments won't increase. My biggest regret was not bagging the 10yr Woolwich 4.99% fix. If rates drop further, I'll still be content with my lot- I can remember getting my first fixed rate and thinking I was lucky with that... 13.4%!!!!!!!!!!!

looster

we had our offer from nationwide confirmed today - 5 year fix, rate reserved a few weeks ago before they increased rates and pulled their 90% LTV deals. I for one am incredibly relieved that for a few years now, we know where we are and our payments are not going to increase. our plan now is to overpay as much as we can every month as well to bring our LTV down.

reehsetin

just got our mortgage at 5.54% fixed for two years. it just wasn't worth the worry and risk, only for 2 years though!

only thing that's bugging me was a headline saying interest rates likely to drop to 2% (think its very unlikely but i'll be kicking myself if i do!)

BaileyB

If they do drop to 2% then i know Nationwide will only reduce it to 2.75%

trixie73

i was offered 5yr fixed at 6.39% a couple of weeks ago, im with halifax. however, iv decided to hang fire for the time being. this isnt that good a deal anyway.