What to do now....

jimsss

I have a £79k mortgage on a property worth £330k with 17yrs 9 months. I have just come to the end of my tracker 2 yr contract with Nationwide.

I have a headache...what to do now. There is a no arrangement fee 5 yr fixed mortgage with NW at 5.98%. This would essentially be the same as I am paying now, £600 / month. However, if the rate comes down.....I have always benefited until the last yr as I have always been on capped or tracker mortgages. I am tempted to take another tracker with NW with no arrangement fee (it works out not worth paying the fee to get a lower tracker rate on the size of this mortgage).

Any thoughts on what might happen (in people's opinion of course) in the next 18 mths? I have always thought of fixed rates as brutal - and the last five years showed why...

regards, Jim.

Jonbvn

The consensus is that there may be an interest rate cut (0.25%) at the end of the year (or early 2008). After this who knows?

IMHO, I think you are best sticking with a tracker for the remaining term of the mortgage, rather than considering fixed rates. The reasons being as follows:

1. At the end of each fixed term, you may have to pay certain lender fees, for valuation etc. Since your mortgage is quite small, the fees will not be insignificant, when considering the overall costs.

2. From what I have observed, generally the current rates for trackers are better than fixed rates (since the lenders are pricing in some risk).

3. A fixed rate would only be worth considering, if the repayments were at the limit of affordability for you, and you needed a guarantee that they would not increase. Depends on your personal financial circumstances.

HTH.