Opinions on 10yr Fixed Rates vs Lifetime Trackers?

pjrouse

We are about to move and had previously negotiated a lifetime tracker of 1.29 plus base with our lender and had discounted their fixed rate deals as the rates were significantly higher and revert to SVR at the end of the terms (which are obviously way more than 1.29 plus base).

Our lender are now offering a 10yr fix at 2.89 percent with the same upfront fee as the life tracker, which means a less than 1% gap and a difference of around £100.00 in monthly repayment initially. They also offer a 5yr fix for a £500.00 higher upfront fee and a rate of 2.28% which again is on my radar.

On the one hand I am tempted by having the security of knowing my mortgage cost for the next decade and being protected from any rate rise, however I have no idea what's going to happen with rates (surely they cant go lower?) but don't want to pay more than I have otherwise would have (I like having my cake and eating it!).

What's peoples opinions on such long fixed rate deals, interest rate forecasts, and has anyone got any links to good calculators that would help me figure out multiple possible scenarios?

Thanks

Paul

Thrugelmir

Very much down to personal circumstances as to what product one chooses.

Will your lender allow you to port your existing product?

pjrouse

Thrugelmir wrote: »

Very much down to personal circumstances as to what product one chooses.

Will your lender allow you to port your existing product?

We can port our existing, however the deals on offer now represent a better deal than our current rate (1.95+base).

I appreciate each case is different but I am keen to canvass opinion in case it triggers something I haven't considered?

Thanks

Paul

getmore4less

what happened to the base + 1.29%?

why not port the tracker and top up with the 10y fix.

amnblog

A lifetime tracker would be for the borrower looking to minimise interest costs but prepared to take a risk to obtain them - the adventurous borrower.


The long term fixed rate is for the cautious borrower who seeks certainty and is prepared to pay for it.


The borrower who selects one or the other based on a guess as to which way base rates are going is simply a gambler.

getmore4less

amnblog wrote: »

A lifetime tracker would be for the borrower looking to minimise interest costs but prepared to take a risk to obtain them - the adventurous borrower.


The long term fixed rate is for the cautious borrower who seeks certainty and is prepared to pay for it.


The borrower who selects one or the other based on a guess as to which way base rates are going is simply a gambler.

Why do people only mention risk with variable but not fixed there are risks with both just different.

There is nothing adventurous about taking a tracker over a fixed if you have done a proper risk analysis.

There I far to much emphasis in the industry on getting people to take fixed rates without proper analysis, When 30% of the business is based on remortgages(not purchase or moves) I guess there is quite an incentive to keep those mortgages churning.

pinkteapot

We're on a lifetime tracker. Yes, fixed rates were very low. I look at that as telling me that the economists at the banks don't think rates are going to rise fast. :cool:

Thrugelmir

getmore4less wrote: »

There I far to much emphasis in the industry on getting people to take fixed rates without proper analysis, When 30% of the business is based on remortgages(not purchase or moves) I guess there is quite an incentive to keep those mortgages churning.

New products result in different follow on rates. Lenders can protect themselves by stating far higher rates than exist today. In the process alleviating themselves of interest rates that were set in the credit boom heyday when funding was a plenty.

amnblog

getmore4less wrote: »

Why do people only mention risk with variable but not fixed there are risks with both just different.

There is nothing adventurous about taking a tracker over a fixed if you have done a proper risk analysis.

There I far to much emphasis in the industry on getting people to take fixed rates without proper analysis, When 30% of the business is based on remortgages(not purchase or moves) I guess there is quite an incentive to keep those mortgages churning.

Tell that to the regulator

Rollinghills

We always wanted the lifetime tracker for flexibility and no hassle.
But when I saw the current 10 year fixed offers I was pretty shocked at how low they are. We applied for 2.94, hopefully will be reduced to 2.89 (nationwide).

We will have a large mortgage and knowing our repayments for the next 10 years will make me sleep better.

Yes there are risks: remortgage risk in 10 yrs time, porting risk if we have to move bur for us it makes sense.

The current government 10 year bond yield is 1.86%, that means at 2.89% is just 1% higher than the rate at which uk government can borrow. Some people criticise fixed rates due to the supposedly higher margins but in the current conditions the margin is low, lower than what you get on a lifetime tracker although obviously higher mark-up over base compared to a lifetime tracker.
If our mortgage repayments were a lower fraction of our monthly income we would have stayed with the tracker option.