Interest rate rises

fpaterson

Can anyone help or advise.

I am due to rearrange my fixed mortgage and was wondering what is deemed the safest bet.

I have been offered a fixed rate for 2 years and also fixed rates for 5 years.

My concerns relate to the current interest base rate and the potential for rises over the 2 year or 5 year fixed term. It will save me £60 per month if I fix for 2 years as opposed to fixing for 5 years.

Any advice would be greatly appreciated.

Tiglath

I don't think anyone has a crystal ball We chose to fix for 2 years a couple of months ago, and I don't personally think rates will rise during that time, but next time we'll probably fix for 5 years as I would think rates will definitely be rising from 2-3 years from now.

fpaterson

Thanks for comments

Thrugelmir

What's the follow on rate on the 2 year fix. You may be gaining now. In 2 years time you could be at a severe disadvantage.

fpaterson

Follow on rate 0.50% + 3.39% = 3.89%

Thrugelmir

That's assuming BOE base remains at 0.5%.

fpaterson

Exactly. It's a gamble I know and having read some articles it appears the BOE aren't looking to increase until 2016 but other establishments are looking for an increase earlier.

dimbo61

The BIG question is do you need the security of a 5 year fix?
Have you got very young kids? OH working part time or a SAHM ( stay at home mum)
Huge mortgage ?
Are you planning on staying Long term in your home and is it big enough for your family need ?
Only you know the answers
2 years seem to fly by and you will pay little off the debt in 2 years unless you can overpay BIG style
Your call

Thrugelmir

fpaterson wrote: »

Exactly. It's a gamble I know and having read some articles it appears the BOE aren't looking to increase until 2016 but other establishments are looking for an increase earlier.

The BOE will raise interest rates when they feel there's the need to. 2016 was last month. Next month the situation could change. Guidance will be like the wind. Direction can change in an instant.

fpaterson

I have young kids and a reasonable size mortgage. I intend to over pay but not Big Style.

Yorkie1

Don't forget that if you take the 2-year product, in 2 years' time you'll either need to remortgage / take a new product with the existing lender, or go onto the variable rate. If you remortgage there will be legal and survey fees (unless free from the new lender). If you do this or take a new product there may well be product application fees. So include these extra costs into your calculations.