2 year tracker or 5 year fix?

Burnley_Lad

Debtslayer wrote: »

Hi Op
What was your decision?

Hi - sorry, I've been working over the last couple of days.

We opted for the two-year tracker option, which from looking at the replies (and thanks to everyone who has replied) on here, our decision seems to be at odds with what everyone else has decided!

The reason why we went with the tracker, is that we felt there's not much point at fixing at 2.44% if the BoE base rate is not likely to increase any time soon (we hope!), and if there are any hints of a rise looming, we are not tied into the tracker, and can jump onto a fixed rate.

bmouthboyo

Just be aware that the Mortgage lenders will get 'hints' of BOE rises well before you, and as such this will be reflected in their offers. In 2 years time a rise will have to be looming and as such the fixed rates will have shifted to reflect this. Over 5 years, coupled with the remortgage fee after only 2, costs will add up.

getmore4less

bmouthboyo wrote: »

Just be aware that the Mortgage lenders will get 'hints' of BOE rises well before you, and as such this will be reflected in their offers. In 2 years time a rise will have to be looming and as such the fixed rates will have shifted to reflect this. Over 5 years, coupled with the remortgage fee after only 2, costs will add up.

People have been predicting this for over 7 years, if you look back at when the rates were dropping towards 0.5% some were saying rates can only go up.

Retention deals can mean low/no fees
Better LTV can mean a lower relative rate
Two years of overpayments from a lower rate mean borrowing less


rates dropped from 4.5% starting Oct 2008 Dec they were at 2% and this was an article at the time
http://www.marketoracle.co.uk/Article7607.html
edit:

Forgot to add that then as now there is lowering oil prices putting a brake on inflation.

Burnley_Lad

I have been looking through my old posts, and this thread is really interesting to me.

After initally taking the 2 year tracker at 1.74% option rather than the 5 year fixed at 2.44% available at the time, I have just fixed today for 5 years at just 1.94%! Our tracker had gone down to 1.49%, expiring in February 2018, but I was concerned that with rising inflation that interest rates my rise soon, and didn't want to be in a situation where I would be looking for a new deal early next year.