Should we be going for a fixed rate mortgage?

emilyt

MarkyMarkD wrote:

A cheaper fixed rate is NOT necessarily a better deal.

If a few years ago, the "fair" rate for a 2 year fixed rate was 6% and you paid 6.5%, but now the "fair" rate for a 2 year fixed rate is 5% and you paid 6%, the current deal is not a better deal - it's just cheaper.

It's like saying that "I got a better deal buying a Betamax video recorder today for £200, whereas they were £500 when they were introduced".

I was only talking about my own personal situation. We decided to go with a 10 year fixed rate which suited us. The interest rates have gone down so now our mortgage works out less each month. I like to know exactly what our mortgage is each month and worry that the interest rates will go up again.I thought that was what this site was all about. Everyone giving different opinions and people making up their own mind. I didn't mean to mislead anyone.

MarkyMarkD

You didn't mislead, emilyt, and I'm glad to hear your personal contribution and opinion. It's just terminology - it's great that you were happy to fix your payments at a level which you were comfortable with, and it may indeed have been a good deal. But I was just pointing out that something being cheaper in cash terms doesn't necessarily mean that it's a better deal.

meanmachine_2

Actually, right now, longer term fixes aren't that much more expensive than shorter 2/3 yr fixes.

I'm surprised that the 2yr from A&L is 4.94% (!!), up from 4.19% last year, while the 5yr fix is 5.24%, up from around 4.84%, I think.

So, yes, a bad time to take on a shorter fix, but the longer term ones are still reasonable value, if you're into that kind of thing.

MarkyMarkD

Isn't that because the yield curve's flattening or something like that? It's fair to say that there's less of a premium now for fixing for longer - so if you want certainty, 5 year fixes (or even longer) are relatively attractive.

Why "!!" on the 4.94%?

deefadog

I am currently been thinking about the 10 year fixed (suites my situation)

But i will not be taking this out for at least 2 months maybe three, what are the chance this rate of 5.19% by the Nationwide will go up in that time? and alsio is it possible for you to take out a mortgage but start the payments 3 months later?

Thanks

timsmith

deefadog wrote:

I am currently been thinking about the 10 year fixed (suites my situation)

But i will not be taking this out for at least 2 months maybe three, what are the chance this rate of 5.19% by the Nationwide will go up in that time? and alsio is it possible for you to take out a mortgage but start the payments 3 months later?

Thanks

We arranged a 5yr fixed rate with Nationwide in January as a re-mortgage but only "completed" at the beginning of May and started paying at the beginning of June.

From what I was told, they usually allow up to 6months but its worth checking in each case.

Tim

deefadog

That's good to know thanks Tim, i would just like to secure our monthly payment ASAP

MarkyMarkD

Tim's right that many lenders' offers are valid for 6 months and it's worth getting in early if you like the deal. But it depends on the way the lender work it out - most lenders' fixed rates are to a fixed end date, so if you sign up early you won't get the full 2 years or 5 years. Others DO give the actual 2 or 5 years (I think Nationwide do but can't remember).

TangentMan

Fixed / variable rates should be thought of as is "can i afford the monthly payment - what are the ERCs like - is the guarantee of a fixed monthly payment more important to me that having the ultimate lowest payment i could get".

You can't guess the market. The money markets are floating markets all of their own. They have external influences, but they're short term movements are caused by themselves. Like day trading on shares.

For example, fixed rates are "high" compared to recent performance. but they are low compared to past historical performance. So .....

lowis

i was at the nationwide yesterday and was told once i had paid the reservation fee i had between 3-6 months to actually get the mortgage going.