Best time to commit to 5 year fix?

mfhstid

I re-mortgaged four months ago, following the end of a 2 year fix, to ING's flexible variable rate. My aim was to wait until rates dropped and then leave ING to sign-up for a 5 year (or possibly longer) fix.

The ING rate when I re-mortgaged was 4.99%; it's now 6.24%. This seems to be the ING business model, for both savers and borrowers: grab market share with an attractive rate, then push up rates and rely on customer inertia.

I'm wondering if now is a good time to plump for a 5yr fix? I can't find anything on how current 5 yr rates compare to those historically. Are the current rates competitive, or should I wait?

The alternative is that I delay fixing for a while longer, and in the meantime move from ING to Woolwich's 'fee-free' flexible tracker (BoE+0.17). The only real downside of that is the exit fee of £295.

I'd appreciate any thoughts on this. My mortgage is for £111K over 19 years, on a house valued at £300K minimum.

MortgagesInc

Five year fixed rates are ok at the moment, but nothing spectacular. You used to be able to get rates sub 5% - currently you are looking at 5.59% with Woolwich. If it is security you want though, then that is what you should opt for - obviously all the time you delay it is costing you about £60 per month over what you might pay on the fixed rate, so the longer you wait, the less long term benfit you would get from a reduced fixed rate (if that makes sense!!)

Looking at changing to the Woolwich lifetime tracker, it would take you 10 months to recoup the £295 exit fee - so it depends on whether you think you might stick it out that long to wait for a long term fix.

mfhstid

Thanks for that. My current ING tracker is anything up to BoE+0.9; the Woolwich deal is BoE+0.17. I'm guessing that if the BoE base rate falls by 0.25% (a realistic prospect in the near future), the ING rate will remain unaltered, with the effect that the future £295 exit fee will be 'paid' more quickly than the 10 months you suggest.

If and when I can get a 5 yr (or longer) fix at less than 5%, I'll be inclined to go for it.

lady38_me

We are in the same situation as you (we are with ING direct) and i also thought about Woolwich. ING direct indeed promises its rate to be not more than BOE + 0.9, but in case o Woolwich it is BBBR + 0.17%, not BOE. My main concern that (after we will switch to them) they can do the same trick as ING direct did: change their BBBR that it will be more than BOE which will effectively bring us back to the same % as ING direct, but now with £295 exit fee. I tried to find but could not an answer to a question: is BBBR should be equal to BOE or they can change it (for example, increase) how they want?

SquatNow

You should have gone for a 25 year fix 2 years ago.

janet6267

Yes, wouldn't we all if we had known!

gazza975526570

SquatNow wrote: »

You should have gone for a 25 year fix 2 years ago.

Exceedingly helpfull to the OP.

MortgagesInc

lady - they could change it, but it has always been the same as BoE base rate, so I don't personally think it will ever differ

mfhstid

Yes, I'd worried about the distinction between BBBR and BoE, but it seems almost 100% certain they're the same. See the links below (and expecially the last one).

http://forums.moneysavingexpert.com/showthread.html?t=545126&highlight=barclays+bank+base+rate
http://forums.moneysavingexpert.com/showthread.html?t=530004&highlight=barclays+bank+base+rate
http://forums.moneysavingexpert.com/showthread.html?p=6352344