5 yr fixed or base rate ?

saxtoda · 5 July 2011 at 9:39AM

hi all,

just coming to the end of my 3 year tracker with the Nationwide.

My options are:

Do nothing and drop automatically on to the nationwide base rate (currently 2.5%) and take the risk that fixed rates will be higher in 6 to 12 months
take out a nationwide 5 year fixed (4.09%) - no fees

I'm currently over paying by £200 per month and there are no fees for unlimited overpayment on base rate.

any advice would be appreciated.

Thanks

CAN1976 · 5 July 2011 at 9:45AM

I am in the same boat, apart from my equity isnt so good. I would be lookign at a 7% fixed vs my current 2.5% tracker. I am going to reassess next year.

Daniel_gecko · 5 July 2011 at 9:45AM

I thought nationwide base rate was 3.99% at the moment?

Personally my choice between 2 yr fix at 2.49% vs 5 yr fix at 4.14% (75% ltv with nationwide) went to nationwide as even a 1% boe rise within that 2 years would make the 2yr cost more than the 5yr overall.

CAN1976 · 5 July 2011 at 9:46AM

Daniel_gecko wrote: »

I thought nationwide base rate was 3.99% at the moment?

Personally my choice between 2 yr fix at 2.49% vs 5 yr fix at 4.14% (75% ltv with nationwide) went to nationwide as even a 1% boe rise within that 2 years would make the 2yr cost more than the 5yr overall.

depending when you took out your mortgage with them, the SVR is 2% above base rate.

saxtoda · 5 July 2011 at 9:53AM

Daniel_gecko wrote: »

I thought nationwide base rate was 3.99% at the moment?

The Nationwide Base Rate is always 2% above Bank of England = 2.5% - however, this is the only chance i'll get to go on this as with new mortgages, they make you go to the SVR instead of the Base Rate.

The Nationwide Standard Variable Rate is currently 3.99%

d40eq6 · 5 July 2011 at 12:19PM

The 2.5% rate is only for those currently on Nationwide mortgages. For anyone looking to remortgage with them then it is 3.99%.

The best variable rate I can find is around 3.5% currently, so for anyone with a 2.5% rate, you're lucky and I would stick with that for now. The best tracker rates are not much below this (ING +1.85% above base).

The markets have priced the first base rate rise for August 2012 which is why the fixed rates have come down. My suspicion is that fixed rates will descend a bit further and then plateau before going up at the end of the year.

If you are able to take the risk, I would stick with the low variable and look to remortgage on a tracker if and when base rates rise. In my view trackers are over-priced currently. If you don't want risk, take advantage of the sub 4% five years fixes. On a medium to long term basis, sub 4% is a cheap mortgage.

d40eq6 · 5 July 2011 at 12:27PM

saxtoda wrote: »

hi all,

[*]take out a nationwide 5 year fixed (4.09%) - no fees
[/LIST]

Thanks

I know that "no fees" sound attractive, but you can often pay more for this option. If you divide the fee (bearing in mind that valuation and legals are free on both deals) by 5 then it is essentially £200 per year extra. If you have a £100k mortgage then that adds 0.2% on to the rate that you pay- hence 4.09% in this instance and the position is neutral.

If however you have a BIGGER mortgage than £100k then you will save by paying the fees. For example if you have a £200k mortgage then you will only add 0.1% on to the rate and pay 3.99% in this case instead of 4.09%.

PickleTricks · 5 July 2011 at 12:31PM

I was in exactly the same situation with Nationwide around 6 months ago and after a little research came to the same conclusions as above... opted to drop to the 2.5% rate.

saxtoda · 5 July 2011 at 12:58PM

many thanks for the advice.

i am existing nationwide customer so i'll be on the 2.5%

looks like i'll stick with that for the time being and look to either a fix rate or tracker towards the end of the year.

Just hope that the rates don't go up in the meantime !