Confused - 2 or 3 year fix?

AnotherJoe

familyguy321 wrote: »

Yes.
Increase in inflation + decrease in value of sterling = Increased interest rate

Look forward to seeing what mark I get

FG

I'd say 5 points for showing your workings, zero points for logic, so 5/10, because I'd say
Increase in inflation + decrease in value of sterling = static or decreased interest rate

Why would the BoE raise interest rates? Inflation is heading up anyway (that was one reason why it might be raised) , the Pound cannot be defended by raising rates (so again no point there) and if tariffs are raised against the UK a low pound offsets that (otherwise tariffs on exports plus higher pound = very bad for economy)

So, I dont see rates being raised this side of 'real' Brexit and for a couple years past that.

I look forward to someone bookmarking this and posting in 3 months when rates raise and I'll admit to egg on face time. As a very clever physicist once said; "forecasting is difficult, especially of the future"

I dont understand the often made point "I like the security of a fix" when what that actually amounts to is "I'd like to know I'll be paying more than necessary for several years". Under anything but a ludicrous scenario where rates rise steeply* 5 minutes after you take the fix out you are still better off with a tracker and moving to a fix if rates start to rise.

* BoE have publicly stated that if rates do rise it will be slowly and in small increments, eg 0.25% at a time.

familyguy321

AnotherJoe wrote: »

I'd say 5 points for showing your workings, zero points for logic, so 5/10, because I'd say
Increase in inflation + decrease in value of sterling = static or decreased interest rate

Why would the BoE raise interest rates? Inflation is heading up anyway (that was one reason why it might be raised) , the Pound cannot be defended by raising rates (so again no point there) and if tariffs are raised against the UK a low pound offsets that (otherwise tariffs on exports plus higher pound = very bad for economy)

So, I dont see rates being raised this side of 'real' Brexit and for a couple years past that.

I look forward to someone bookmarking this and posting in 3 months when rates raise and I'll admit to egg on face time. As a very clever physicist once said; "forecasting is difficult, especially of the future"

I dont understand the often made point "I like the security of a fix" when what that actually amounts to is "I'd like to know I'll be paying more than necessary for several years". Under anything but a ludicrous scenario where rates rise steeply* 5 minutes after you take the fix out you are still better off with a tracker and moving to a fix if rates start to rise.

* BoE have publicly stated that if rates do rise it will be slowly and in small increments, eg 0.25% at a time.

50%...that's a pass so I'll take that :beer:

On a serious note, your arguments are sound but I still think we will see interest rates rise as a result of Brexit activity. From last week's ruling, it looks like the point we leave the EU could drag on so I have decided on a 2 year fix instead of 3 year. I will then overpay every month to hopefully have a low enough LTV at the end of the 2 years to go for a longer fix at a lower rate.

I did look at trackers and I didn't see a massive difference in rates vs fixed to justify going for them.

Thanks for your help.

FG

familyguy321

getmore4less wrote: »

A lower rate and over pay is another way to get security and that lasts for longer than any fix.

if you don't want to pay a premium(some would call it a penalty) along with the fee for a long time why pay them every few years?

I've been offered a decent 2 year fix rate from my current lender with the option to overpay....which I intend to make the most of. There are no fees as I would be staying with them.

FG

united4ever

lee111s wrote: »

Have you considered a tracker?

I doubt rates are going anywhere soon. Trackers give flexibility which often allow you to remortgage at any point (they don't have ERC's) or switch and fix to a fixed rate product should you get worried or if rates begin to rise.

I am deliberating over a 2 year tracker with Natwest at 2.39% or a 2 year fix at 2.54%. Existing customer coming to end of 2 year fix. No fees for both options. It's a dilemma alright:undecided

Mogley

Go for the tracker and overpay the difference in monthly payment compared to going with the fix. This philosophy works to bring your LTV down for the next time you re-mortgage whilst mitigating a small interest rise during the 2 year period.

Better still, if you think your prediction will come true.....

familyguy321 wrote: »

Increase in inflation + decrease in value of sterling = Increased interest rate

... overpay on the cheapest tracker mortgage you can get to the equivalent of your predicted interest rate rise. Result is reduced LTV after mortgage deal ends plus interest rate rise risk avoidance as you can always reduce your monthly overpayments if required.