2 Year Fixed vs 5 Year Fixed Mortgage? Today's News of Interest rates Going up ??

getmore4less

csgohan4 wrote: »

Don't forget to factor in mortgage fees, broker fees and conveyancer fees. It all adds up and if your doing it for 2 years fixed, your going to double those costs in a 5 year period.

Pick right and you will not be changing lender so just product fees to factor in.

eg

lets look at £100k loan over 20 years 80% LTV on a 2+3 against a 5.

pick a lender HSBC.2y 1.99% 5y 2.89% paying £550pm

after 2 years(new LTV 72.5%) to better the 5y you need a rate(no fees) of 3.61%

Current 3y no fee is 2.79% so taking the 2 year is betting the rates won't go up 0.83%.

ScoobyZ

My three years fixed rate finishes in 5 months. i took it out as everyone was saying mortgage rates are going up!

Wern't they supposed to go up in January 15?

Why fix at a much higher rate?

Inflation is under control. Recovery still slow. If you must fix try and get the longest term under 2% you can.

Jon_B_2

ScoobyZ wrote: »

My three years fixed rate finishes in 5 months. i took it out as everyone was saying mortgage rates are going up!

Wern't they supposed to go up in January 15?

Why fix at a much higher rate?

Inflation is under control. Recovery still slow. If you must fix try and get the longest term under 2% you can.

Having an understanding of last weeks budget and how that will affect inflation will give you all the info you need of the risk of a rate rise.

Ultimately it is one big gamble, but I'd be very surprised if rates don't go up in the next 9 months.

ScoobyZ

Jon_B wrote: »

Having an understanding of last weeks budget and how that will affect inflation will give you all the info you need of the risk of a rate rise.

Ultimately it is one big gamble, but I'd be very surprised if rates don't go up in the next 9 months.

I don't think they will as I still think they are incompetent like I did 8 years ago when they were raising rates:


https://forums.moneysavingexpert.com/discussion/525227

Inflation forecast here:

http://www.statista.com/statistics/306720/inflation-rate-forecast-consumer-price-index-cpi-united-kingdom-uk/

0.9% by end of year.

1.9% by end of 2016.

Jon_B_2

ScoobyZ wrote: »

I don't think they will as I still think they are incompetent like I did 8 years ago when they were raising rates:


https://forums.moneysavingexpert.com/discussion/525227

Inflation forecast here:

http://www.statista.com/statistics/306720/inflation-rate-forecast-consumer-price-index-cpi-united-kingdom-uk/

0.9% by end of year.

1.9% by end of 2016.

No, you completely missed my point. The link of forecasted inflation was compiled before last weeks budget.

The national minimum wage is going up nearly 10% next April. Private sector businesses will not have budgeted for this, maybe closer to 3%. Many businesses will not be in a position to absorb this and will have to pass their increased costs onto their clients and customers which in turn will mean higher prices in everything produced in the UK.

Let's say people put through moderate price increases of 3/4%, inflation will be closer to this come April next year....

ScoobyZ

2 Year Fix @ Nationwide 1.79%
5 year Fix @ Nationwide 2.34%

About a year ago a colleague got around 3% for a 5 year deal. Maybe after 8 x 0.25% rises they will be better off!

Personally I would go for the 2 year fix if I had to fix.

getmore4less

Jon_B wrote: »

No, you completely missed my point. The link of forecasted inflation was compiled before last weeks budget.

The national minimum wage is going up nearly 10% next April. Private sector businesses will not have budgeted for this, maybe closer to 3%. Many businesses will not be in a position to absorb this and will have to pass their increased costs onto their clients and customers which in turn will mean higher prices in everything produced in the UK.

Let's say people put through moderate price increases of 3/4%, inflation will be closer to this come April next year....

Can't believe NMW inflation filters through at anywhere near those levels.

Average weekly wages in the UK does not even have blip when the rate of NMW changes up.

mrginge

Jon_B wrote: »

No, you completely missed my point. The link of forecasted inflation was compiled before last weeks budget.

The national minimum wage is going up nearly 10% next April. Private sector businesses will not have budgeted for this, maybe closer to 3%. Many businesses will not be in a position to absorb this and will have to pass their increased costs onto their clients and customers which in turn will mean higher prices in everything produced in the UK.

Let's say people put through moderate price increases of 3/4%, inflation will be closer to this come April next year....

The slight flaw in your logic is that only about 5% of the total workforce are affected by the nmw.

The impact of the increase on inflation will be miniscule (as it always has been)