Stay with my long(ish) fix or jump ship to a tracker?

Spangled

I'm on a decent-ish fix with Coventry of 5.55% until July 2010. But I have no ERCs (and only a £125 exit fee) so am thinking of jumping ship to a lifetime BR tracker with another lender. With all this talk of the BR heading south (3%, maybe even 2%), I can't stand the idea of paying over the odds, especially to a bank!

Tracker margins aren't great right now but even with, for example, a fees-free Woolwich BR+1.29% tracker, I should be quids in with just a 0.25% drop in the BR, which most business commentators think is imminent.

Then again, maybe I should just be thankful that I have a decent fix and stop worrying about mortgages for the next 18 months?? The Coventry deal allows unlimited overpayments too.

So my question is (and I realise this is a bit of a finger-in-the-wind question): what would you do in my position?

Stick with the fix and get on with enjoying life?
Or move to a tracker and ensure greatest value for money?

hethmar

Oh spangled its a tough one. I have lived through previous recessions where I saw interest rates double to over 15% and since then Ive always had a fix (finished mortgage now - hooray). I dont know what Id do either. It has been said that whilst the BOE rate will drop, its unlikely the mortgage providers will follow suit as they have to continue to generate savers interest.

Gorgeous_George

That is an exceptional deal. No tie-in?

You are a little late but it would be may be worth moving to a tracker deal. However, with such an attractive fixed rate deal, I'd wait to see if fixed rates fall after Christmas and perhaps move to a new fix then - at possibly less than 5%.

LTV and loan amounts would help a more reasoned response.

GG

whu

Hi - I have always had a fixed rate as I prefer to know what my payments will be - during the fixed period I may pay more for some of the time and less at other times but at least I know what my payments are - I prefer it that way but others may not - BTW if you go for a tracker read the small print as some lenders wont pass on reductions if the base rate goes down to a certain amount - eg I think Nationwide might stop at 2.75- also bear in mind loan to value etc if moving lenders

Spangled

GG - yes, no tie-in. I paid a £1k application fee for that flexibility but thought it worth it. LTV around 55% (165k on 300k conservative value).

Whu - yes, aware of tracker collars. Don't think Woolwich have them so that was why I was tempted by them...

unite79

Stick with the Fix, wait till feb/march 2009, and see what the bail out has had - and thank the Lord you got such a great deal.

Spangled

I think my big concern is that if I wait until the New Year then the decent BR trackers will have disappeared. I've seen comment in more than one place that if the BR heads majorly south, then banks will either increase their tracker margins accordingly or even withdraw their trackers completely — hence the thinking about switching to a fix now... (BTW GG, in case you are wondering, I got the Coventry deal in July 2007 — it's a three-year fix)

unite79

Get your thinking spangled, but you will struggle to get a better fixed rate than you have already - also bearing in mind you are almost at 50% ltv, think these will be the last level at which you may see trackers disappear, this week nearly all 90% trackers have gone, however this has born constant with the market over the last year - ie high LTV's go first.
My opinion is that Fixed rates do not offer good value for money at moment due to LIBOR rate, which is falling, I remain with the opinion that fixed rates will improve at the start of next year

mic200202

I would observe with the BOE rate falling that this has all appeared on the radar very recently.It was only a few months ago that no-one could see rates coming down and now we have all sorts of talk about 2% and the like.So these are all short term events.If they can go down quick they can also go up quick.A tracker is really a gamble on rates falling consistently to get you an average that would be lower than you would have got on a fix.Think about that - to gamble? in this market??? Here's my prediction on interest rates and it it always right - rates will go down and rates will go up.No one can see more than a few months ahead in 6 moths time the position could be completely different. I would stick where you are.

will-in-estoril

If the LIBOR falls then it is likely that there will be better tracker deals available, as well as lower fixed rates.

Stick where you are until the New Year.

Spangled

Just to update on my "dilemma". Yesterday's 1.5% cut put the cat among the pigeons somewhat meaning my 5.5% fix now looks decidedly uncompetitive. So I went into HSBC today and reserved their +0.99% lifetime tracker which is, IMO, just about the best tracker deal out there. There's a £799 fee but I'll be saving almost £200 a month on my £160k mortgage so I'll recoup the outlay pretty quickly. And as I bank with HSBC, I'll be able to manage my mortgage online and make overpayments easily. I'm not convinced that tracker rates will radically improve in the New Year, hence my thinking about bagging this HSBC deal now...