Fixed rate ending -tracker or another fixed?

Krashty

Hi,
My 2 year fixed deal (5.99%) is coming to an end in September. I can go onto a tracker at current rate of 1.45% (0.95 + base) or a 2 year fixed that my current lender is offfering at 3.49%. After the two years though the tracker rate goes up to 1,49 + base.

So, which punt to take? What do you think?

Cannon_Fodder

Does the lender offer a 5-yr deal?

You should be able to get 5-yr fix for under 5%, so that is a saving on what you have been used to paying, plus there is the peace of mind that 5 years should take you beyond what looks like being a painful period in a year or two. The BoE says the base rate will be 4% in 2012, which equates to around 6% in mortgage terms.

And if they are out by 6 months or so, you'd be re-mortgaging just then...

opinions4u

The tracker does it for me.

Work out how much cheaper it is than a 5 yr deal and use the difference to overpay and reduce your debt.

steve237

Cannon_Fodder wrote: »

The BoE says the base rate will be 4% in 2012, which equates to around 6% in mortgage terms..

I've been out of the loop news-wise over the last few days. Is this an official prediction made by the BoE?

I hope so as I tied into a 7-year fixed, and I was starting to regret it a few days ago when Mervyn King did his quarterly review (stating interest rates would stay low for longer than originally thought).

Krashty

Thanks, I'm swaying towards the tracker but worried about what's going to happen with interest rates the second half of 2010/first half of 2011.

Bit wary of taking anything longer than a 2 year fixed - I'm a commitment phobe!

Cannon Fodder: where does the info come from that the base rate will be 4% in 2012? Have missed that one.

Cannon_Fodder

http://www.bankofengland.co.uk/publications/inflationreport/ir09aug5.xls

Estimate of mean expectations
2012 Q1 4.0
2012 Q2 4.2
2012 Q3 4.3
2012 Q4 4.4

and slide 12 of http://www.bankofengland.co.uk/publications/inflationreport/ir09feb5.ppt

Rates might stay low for a bit longer than thought a few weeks ago, as a result of extending the QE process, but I think they'd already made their minds up to leave them alone until the election anyway.

After that, it will probably be a whole different ballgame so fixing now for a long period is a good idea, imo.