Fix now or move onto Nationwide Base Mortgage Rate

arun76

My current three year fixed mortgage deal is coming to an end at the end of June and will revert to the Nationwide BMR which is currently capped at a maximum of 2% above base rate (so currently 2.5%).

My property is value is £200000 with a mortgage remaining of £70000, so the LTV is only around 35%.

The big question is the consensus in general that the BoE interest rates are going to increase to 2% or greater in the next few years and if so is it worth fixing at:
1) around 3.5% for two years
2) around 4% for three years
3) around 4.5% for five years
4) or just stay on the Nationwide BMR (2% above BoE rate)?

Thanks

Thrugelmir

Stick on the SVR and overpay.

By choosing any other fixed rate product you'll default onto a higher SVR when the terms ends. Once off base plus 2% you may never obtain this rate again with the NW.

arun76

Thrugelmir wrote: »

Stick on the SVR and overpay.

By choosing any other fixed rate product you'll default onto a higher SVR when the terms ends. Once off base plus 2% you may never obtain this rate again with the NW.

Thanks, that's what i was thinking and leaning too as well.
But the risk of interest rates rising significantly is a real issue and that's what is drawing me back into fixing the mortgage.

getmore4less

arun76 wrote: »

Thanks, that's what i was thinking and leaning too as well.
But the risk of interest rates rising significantly is a real issue and that's what is drawing me back into fixing the mortgage.

But that only helps for the period of the fix after that you are on whatever rates are going and the default will be higher than the B+2% whatever that is.

Overpaying/saving while your rate is low can significanly reduce the risk.

madmish00

Stick to the BMR. They don't offer this anymore so you won't get a variable rate as good as that again.

Rates aren't going to rise to 2% overnight so you need to offset the period you are paying less than the fixed rate with the period you would be paying more than the fix. I'd say overall you'd be quids in sticking to what you have (plus don't forget to factor in any arrangment fees etc on a new product).

TrickyDicky101

What's your remaining term? The shorter the term, the less sensitive your monthly repayments are to hikes in interest rates.

Thrugelmir

arun76 wrote: »

Thanks, that's what i was thinking and leaning too as well.
But the risk of interest rates rising significantly is a real issue and that's what is drawing me back into fixing the mortgage.

The less capital debt you owe, the less you'll be impacted by future interest rate rises.

Rather than pay product fees use the money to repay your mortgage.

arun76

Thrugelmir wrote: »

The less capital debt you owe, the less you'll be impacted by future interest rate rises.

Rather than pay product fees use the money to repay your mortgage.

The rates i have quoted for the fixed products are the average for products without fees.
Also you are correct as my capital debt is fairly low any interest rate increase (say at worst up to 3.5% BoE) will only increase the mortgage by £100.

I have heard that you can reserve mortgage products for up to six months. Does anyone know which lenders do this as i could then possibly reserve a fixed rate product now for 6 months and depending what happens with the interest rates in the next few months decide to move onto the reserved fixed product or just stay on the BMR.

My current term is currently 17 years, but i will ask if i can reduce that to 12 when my current product ends..

kittieviolet

You can reserve a mortgage with the Nationwide 3 months ahead.

TrickyDicky101

Can I ask why you want to fix? Is it because you are very concerned that you couldn't absorb rises in interest rates easily? In your position I would stay on the BMR and adjust my payments so that I am overpaying by approx £150 pm in which case you would effectively be overpaying to the extent of shortening your term down to the 12 years. This would then give you a buffer cushion should interest rate rises so that you can leave your outgoings the same and simply make slightly lower overpayments each month.

whiskers

Personally I would go to the Nationwides 3yr fixes @ 3.99 for the peace of mind!!!!