Confused over fixed or tracker mortgages (are interest rates expected to rise or not)

olympicsmummy

I've done a lot of research but i'm still not sure whether I should go for a fixed or tracker mortgage?

My understanding is that interest rate are predicted to rise slightly in the next few years (of course this may not happen)

On our budget we can afford a repayment of around £1100 per month. We could afford for that to go up by £200 or £300 a month.

Should I go for a fixed or tracker? (I know you dont know all my circumstances and alot depends on that!)

Abatement

In my opinion, there's not much point trying to answer that question in the abstract. The better approach is to work out what specific tracker/fixed deals would likely be available to you (based on your mortgage size, loan to value ratio, creditworthiness etc), and then decide between the best deals available. A decent mortgage advisor should be able to tell you about the best tracker AND fixed deals, and you can then weigh them up.

That said, based on the very limited information you've given, it sounds like you might be reasonably sensitive to interest rate rises, which suggests a fix might be better. But really that's just guesswork at this stage.

Building_Surveyor

If your asking for a specific answer on interest rates, yes or no - you might as well be asking, does anyone know the lottery numbers that are going to come up on saturday?

kingstreet

As rates are not going to fall, I can't see much point of a tracker if you can get a longer term fix at a similar rate. The only potential benefit of a tracker is if it is penalty-free and you see yourself not needing a mortgage within the penalty period of a fix?

Jimbo1976

Wise words as ever KS. However there may be some people who take out tracker mortgages because lenders don't tend to offer fixed offset loans. The vast majority of offsets tends to be trackers so most borrowers who want an offset don't have much choice.

rochja

My opinion and that is all it is - is that a fee free tracker is going to come in at a much lower rate than the final rate on a fixed rate mortgage and probably quite similar to the rate applicable to a fixed rate mortgage with similar qualification criteria. Because it is a lifetime tracker, whilst-soever you are happy with the rate there is no need to change. Compare that to a fixed term fixed rate which after the period you are going to want to escape from - and your situation or the lending criteria may have changed so that you cannot actually find a better deal. If house prices drop your LTV changes disadvantageously.