Are fixed Mortgage rates on the increase again?

latecomer

Our current fixed mortgage period is ending in February next year and I've casually started looking at the market a short while ago. We are looking for another fixed (but not at 5.39% this time ) probably with a 5 year term. LTV is around 30-40% and 1.2-1.5x our joint income depending on how much we pay off the capital balance when we change.

There was one or two products at 2.95% with a £2500 fee when I first looked but now it looks like there is the Natwest 5 year fixed at 3.09% - hence the question regarding whether rates are going up again?

Does anyone know how long a mortgage offer is valid for these days with the Natwest? I'd be very happy with a 5 year fixed of 3.09% as I dont think they will get much better particularly given the historical rates.

The only thing thats possibly putting us off from applying now is that I've just changed jobs a month ago and its subject to a 6 month probation period although I dont think there being any possibility of it being terminated. That said my OH salary is more than sufficient to borrow what we need on its own.

Thanks

latecomer

Didn't expect many replies but had hoped for at least a couple - prehaps more concise questions would help:

Have the low i.e. sub 3% 5 year fixed rates been withdrawn recently and is this continuing?

Is a probationary period an issue given a low LTV and OHs good income?

Any and all replies gratefully recieved

kingstreet

Rates on offer vary based on the money market's feelings about future rate changes. The lender sets the rates it offers based on the rate-swaps it can achieve in the market.

The rate obtained often relies on the size of the upfront fee being paid. Higher fee/lower rate and vice-versa. You have to choose the right rate for you based on how much you are borrowing and for how long.

Other incentives like free-legals and free valuation also tip the balance on lower value mortgages.

According to Mortgage Brain, the best five year fix for a remortgage is currently 3.09% but has a fee of £2,495. The best totally fee-free offer is 3.59%, although it must be said the telegraphic transfer and final fees add up to £124.

On a £100k mortgage, the interest and fees add up to £17,945 on the lower rate over the five years. On the higher rate, the total is £18,074, just £129 difference, over 60 months. This makes the follow-on rate potentially important as a deciding factor, as you may wish to choose the product with the lender with the historically lower standard rate.

On a £200k mortgage, the difference becomes £2,629 in favour of the lower rate, a much wider gap and a better option for the higher value mortgage.

Probation is a problem for some lenders. Others are happy to lend even if someone hasn't yet started a job, as long as they have a written offer and start date.

sgoode

I am in a similar situation to yourself although I am coming out of a 3 year tracker. I think I want the peace of mind of going for a fix this time.

I saw a Natwest mortgage advisor on Monday. I think he said the offer lasts 3 months, as he said I could apply for it now and it will sit waiting until December when my current deal ends.

Their 5 year fixed has just gone up from 2.99% to 3.09% with the £2495 fee. When I do the maths it is cheaper for me to go for the fee free deal at the higher rate.

I am also looking at their 2 year fix which are currently 2.85% with a £995 fee or 3.29% with no fee.

latecomer

Thanks for the replies.

Kingstreet - I understand the tradeoff between product fees and rates, and also the additional costs to be taken into account. I'm not that concerned about follow on rate as there is no guarantee that the current or historic rates will indicate which product will have the best rate in 5 years time. Also given that the remaining term will be 3 years at that point - possibly less if we overpay - the interest rate changes will have less of an impact.

HSBC have a 3.49 - with only legal fees to be paid which works out pretty well but will need to have a better look later when I'm not at work. I guess if the probation period was an issue we could wait until the 1st March when its finished.