5 year fix or 10 year fix?????

brannyrhino_2

TangentMan wrote:

Brokers tend to prefer short term deals to long term deals.

IMHO even if rates go down, you aren't losing money, you are just paying a little bit more than you might otherwise do. However i can't see Fixed rates going down, say, 2% but i could see them going up 2% since rates are at quite a low level.

Looking at the world in general, with Japan coming out of deflation, the dollar under quite a bit of pressure etc, Base Rates such as the BofE are likely to move. Again, if they move it is unlikely to be much lower and even if they do, if you are on a fix it doesn't cost you anything extra.

I'm just an old cynic me!

Brokers prefer short term deals because they get the fees each time you remortgage so a two year rate is far more appreciated by a broker who will see you again in two years and not in ten years time!!

Long term or short term all depends on your response to risk.

If you want to protect your Family and investment for 25 years take the long term if not take a gamble on short term.

Most people are somewhere in between.

I'm on the ultra cautious side as i remember the rates of 15% and the effects that had.

Officer_Dibble

Indeed, Brannyrhino. Clearly, if rates become too high, it's going to be too late to find something worth switching to.

I've only been able to find stats as far back as 1973, but I can't find a single 5 year period where you'd have been better off with a variable rate than the current 5 year fixes - apart from the last 5 years, and that's fairly marginal. It's even more clear cut for 10 year fixes, but personally I think that's rather a long way ahead for anyone to predict their circumstances. Of course, now we're entering a new era of permanently low interest rates - LOL.

IMHO, There's a small chance that you might end up slightly worse off with a fix, and a good chance you'll be a lot worse off with a variable rate. Far from being a gamble, a fix is a sensible insurance policy.

meanmachine_2

Over the last ten years the base rate has averaged around 5.5%.

If you can fix long term for less than that, I'd go for it.

Remember, our rates only went down to 3.5% because US rates plunged even further after 9/11.

The last four years have been an aberration. Rates will stll be fairly low in the coming years, but back around the 5-6% mark, I'd have thought.

But then again, there could be another terrorist strike and rates are slashed again. so who can say?

Vincenzo

While perhaps not as relevant to a choice between a 5 and 10 year fixed the costs of remortgaging should also be taking into consideration. While some lenders offer to pay towards them, this seems to be less and less common. On my last remortgage I paid the equivalent of one month's mortgage payment in fees to the lender and solicitor.

I had planned on taking a two year fixed but when I took into account the remortgage fees (and hassle) decided to go for a 5 year fix as it actually worked out cheaper when comparing the total costs involved. Not sure about a 10 year fixed though - seems rather a long time. Although you could be laughing if we see the likes of 15% base rates again!

brannyrhino_2

What ever you do you will have to do it quick as Swop rates are rocketing at the moment so lenders are pulling back from Fixed rates in a big way and you will find the choice of Fixed rates drops to be replaced by trackers.

Mark my words!!

meanmachine_2

FYI, Northern Rock are raising their fixed rates from the 11th, but cutting their 2 yr fix on low LTVs (which wasn't very competitive anyway).

Their 2yr fix on a 90% LTV is a gobsmacking 4.99%!!!