Is it right time to lock the mortgage rate for 5 years?

Mon06

Thank you all in advance. 

And stay safe. 
current mortgage term: 2 years
flat of 2 beds in london

My mortgage term is coming to an end within 12 days. We have seen recent cut down of interest by BOE However there is no change in mortgage interest rates. So my question is shall I go for long term mortgage (5 years) as I believe that house price will not increase very soon due to extra borrowing and injection of money in economy. And hence interest rate will not go down further than What we have now.  I was thinking to go for 2 years mortgage term, (1) in case house price will increase and I can release some equity towards my big house and (2) if interest rate will reduce than after 2 years I can renew my term with new lower rates. But situation is different now due to .....

If I go for longer term I can save in application fees, but than rate is slightly higher than short term. 

I have two choices
2 years with 2.02% with £500 fees 
5 years with 2.22% with 1795 fees 

Please advice urgently 
thank you once again. 

amnblog

2 years with 2.02% with £500 fees 
5 years with 2.22% with 1795 fees 

Not modest rates, are you +75% loan to value?

Thrugelmir

Any no fee options? 

Mon06

amnblog said:

2 years with 2.02% with £500 fees 
5 years with 2.22% with 1795 fees 

Not modest rates, are you +75% loan to value?

Yes that’s right. I am at 75% LTV. Thanks 

Mon06

Thrugelmir said:

Any no fee options? 

Yes there is but it’s with very high rate. 2.93%

[Deleted User]

They are quite high rates for a 75% ltv.

You could get a 2yr with 999 fee for 1.39%.  Fee free for 1.74%
5 year no fee at 1.84%

Is this the best deal you could find? 

thriftypatos

Why do people take no-fee mortgage products? Always more expensive overall.

sysadmin

Im just about fix for 10 years at 2.15% (no penalty to change after 5 years though) with less than 60% LTV
Not sure if this is a good idea now or not, but my broker has said that they dont expect the interest rates on the fixed rate mortgages to change by much if at all. 

davidmcn

thriftypatos said:

Why do people take no-fee mortgage products? Always more expensive overall.

Why "always"? Surely it depends how much you're borrowing, as the fees tend to be the same even for smaller amount?

[Deleted User]

thriftypatos said:

Why do people take no-fee mortgage products? Always more expensive overall.

50 Grand shared ownership mortgage and it’s cheaper!

I do agree that some people do get too worked up about paying, say, £999 upfront (even though it should be refundable) or even adding it to the loan, when ultimately that could be the lowest total cost way to do it for their loan size. 

I’m very interested to see if rates drop after yesterday - the cut to 0.25% was factored into most pricing for weeks, but I do wonder how many lenders would’ve looked at 0%/0.1% scenarios

Problem OP has it that it takes time for products to change and the market to stabilise - have you got the option of a product transfer (to a product with no ERCs) if you really want to keep options open for the next few weeks? 

I suppose the other risk factor to mention is that while rates *should* nudge downwards, what if lenders can’t cope with demand due to too much sickness and therefore effectively ‘stop lending’ (higher rates/higher margin on the stuff that is sent through to them). If you wait 2 weeks and 4 major lenders all downsize their lending operations (temporary), then you’ve missed the boat if rates don’t actually go down/only available rates actually start to increase