In the current situation, is it advisable to go 2 or 5 yr fixed mortgage

sysadmin

I’ve just fixed for 10 years at 2.1% which I’m pretty pleased with. Exit fees are only for the first 5 years as well, so we can come out between year 5 and 10 if needed 

ElephantBoy57

steampowered said:

Crashes/recessions are much more sudden than bull markets. While interest rates fell off a cliff as the world entered a sharp recession, it is much less likely that the opposite would happen.
A best case scenario would be that the world economy will recover and grow strongly for a few years, which would result in interest rates going up but not in the manner of a sudden crash.

I get your point, but the situation at the moment is very uncertain. I cannot see your best-case scenario being in the next 12 months. I am not an economist, so it could be deflation or inflation, but it's going to be a very rocky period.

saajan_12

rates are super low >  they are likely to increase at some point > quick, lock in the super low rate now for longer
Right? No. This is where I explain the concept of priced in. Banks base their forward rates based on expertise from traders whose daily job is to target the market consensus on where forward rates should be set, accounting for where the world's experts think rates will go. So the 5yr interest rate being x per cent higher than the 2 year? That'll already account for how much the market thinks rates will increase. The markets trade fairly tightly and free from arbitrage (ie market factors adjust to the point there is a strong consensus on forward rates). So unless you think you know something the banks don't, you won't get anywhere by analysing the rates differentials. 

However there are other personal factors to consider. 
- do you expect to stay in one place, or have a job that just covers the mortgage upto a certain monthly payment and want security on that rate not increasing for the forseeable? 
- do you expect to need to move / buy with a partner / some upheaval in the next 5 years, in which case a longer fixed term might mean more likely to face early termination charges if you cant port the mortgage for some reason. 

han_nah95_2

We are also FTB - we decided to go 5 years with an interest rate of 1.95%
We decided 5 years as this is our forever home so won't be looking to move any time soon 
We also thought that not a lot will change within 2 years - we are settled in secure jobs and not looking to leave them and also we thought we'd lock in the low interest rates for a little longer. 
We did look at 7 or 10 year fixed rates but they weren't feasible. 

PJBRFC

Also just fixed for 5 years at 1.64%. Will be our forever home.

Ozzuk

I've just agreed a mortgage at just over 1.5 for 5 years, this will be a long term home but just wasn't comfortable with 10 years (things change!). Rates can only really go one way and if the virus has taught us anything its you never know what is round the corner.   You will need to factor in the risk on redemption fees for the same reason.

AlexMac

Don't panic; I'm a great believer in happenstance... Que sera, sera and all that.
I don't think rates will rocket in two years, OP, but if you could shift now to a longer fix, it wouldn't hurt.
But back to happenstance... when we took out our current loan, in the late 1990's, we opted for an open-ended tracker 0.75 above BoE base rate; which was then an eye-watering 6% plus... We didn't really think it through and wern't financially  savvy, but it turned out to be the best decison ever...   Because although it seemed toppy at first, at around 7%, the 2008 crisis knocked rates down to 1 or 0.5%, so we've been bobbing along on 1.25% for ten years, and incredibly, it's just gone down again!

I guess it makes up for the fixed rate one I took out in 1975 at 10%- which seems daft now, but was a blessing when rates topped 15-16% in the late 70's...  That ain't going to happen again