Is it daft to jump from a fixed to variable mortgage at the moment?

Lungboy

I'm currently coming to the end of the 2nd year of a 5 year fix with TSB. It's at 2.39% which is quite a bit higher than some of the best mortgages currently available, and with childcare fees set to double in January I'm looking to save money wherever possible.

The mortgage is ~£93000 (<50%LTV) with 28 years left to run. I'm wondering it it's worth jumping to something like the Coventry Flexx for term mortgage at 1.39% or their offset Flexx at 1.59%, or whether i should sit tight and see where things are in 3 years when my fixed term ends. The MSE calculator suggests I'd save ~£1100 over the 3 years left of the fixed term if I was on the 1.39% Flexx if it stayed at that rate, but that obviously looks rather unlikely. If it jumped to 1.89% I'd still be a few hundred quid up over the 3 years after fees, but any higher and i'd start to lose money.

With Brexit still yet to happen and everything so uncertain, I'm really not sure what the best thing to do is.

AnotherJoe

Brexit will tend to keep interest rates lower than otherwise.

amnblog

Pretty expensive to jump out of your fix now is it not?

You are paying to lose the benefit of medium term security that you presumably signed up to initially.

Lungboy

It is expensive, ~£2750 plus any new fees, but I've factored those into my OP figures. I should be able to recoup that money plus extra within the 3 year period left on the fix. 2 years ago people were also talking about rate rises, which is why we went for the fix, but people were wrong and rates continued to drop to where they are now. There's always the option of a 10 year fix with TSB at the same rate as now, although that then becomes an almost £4k fee to extend our current fix by 7 years which doesn't sound so attractive.

I guess that if rates go up slightly in the next 3 years I won't be much worse off on the fix and can then switch without any fees.

amnblog

As I said elsewhere on the forum today.

Fixes are about limiting your risk on rate rises. There are not about trying to second guess the market so you end up ahead on the deal. That's simply gambling.