Mortgage Switch Rates (Nationwide)

liviboy

Hi all,
We're currently on a tracker mortgage with Nationwide (1.49% + BOE Base Rate so currently 1.59%) with 12 months left to go.
LTV has just dipped under 75%.
Nationwide Property Value: £293,215
Mortgage outstanding: £219,706
Monthly payment: £910.45
Term: 24 years, 3 months.

Having a quick look at Nationwide's switching site has led me to think about fixing.
They have a 2,3 and 5 year fix that look quite tempting, all with £999 product fees:
2 year: 1.29%
3 & 5 year: 1.54%
10 year: 2.19%

I'm edging towards the 5 year fix because it gives stability in payment for 5 years, is a lower rate (albeit minimally) than we are currently paying and because we are just under the 75% bracket it's going to be sometime before we hit the 60% bracket which seems to be the next "jump" bracket.

I really just wondered if anyone had any thoughts on what they would do in our position? We know rates really are at all-time lows.

We don't intend to move from this house.

Thanks :-)

[Deleted User]

Why did you take a tracker in the first place? 

liviboy

Im not sure why that’s relevant (maybe you could explain?) but...

It was a 2 year rate that I predicted wouldn’t rise by much (and if it did I could fix with no ERC) and enable me to get under the 75% LTV by the end of the term.

Tracker allows for overpayments which I was making until December (new baby now so less £££ for overpayments).

I check every month to see how rates are looking and today it showed I was under 75. In January I had predicted it would be 8 months until that point but the property value has gone up by £10,000 since January on the Nationwide calculation.

IAMIAM

I would stick with tracker UNTIL any inkling the base rate is moving.
They have existing customer tracker at 1.39% but the fee is £999 and I don't think its worth it - if you then have to switch again to a 5 year fix because rates have increased. I also still sense there is going to be a minimal drop in rates still based on every press article telling us base rate will be zero or below by the end of 2021/22

K_S

@liviboy In your place, if I'd paid a fee for a 2 year tracker at a competitive rate and it had a year left to run, I would let it be in the current interest rate environment.

Of course this is just an opinion and might turn out to be horribly wrong if interest rates (for whatever reason) jump significantly in the next year!

jimjames

When I first took out mortgage with Nationwide I went on the tracker product. Since 2011 I've done fixed rates and each time I've renewed it's been a lower rate. I can see that rates will only be going one way so personally I'd take fixed rate (and will be when my mortgage rate expires at the end of the year)
Bear in mind you can repay 10% of original loan every year even for the fixed rate products which should normally be enough for most people

Thrugelmir

Frequent paying of £999 product fees are going to mount up. 

liviboy

Thanks all,

Whilst I know Product Fees are a bit of a killer, we are going to have to pay one sooner or later (and in any event within the next 12 months).
Predictions even on here are that rates won't be going lower and indeed post-covid +brexit may mean rates need to rise.

But thank you for your suggestions.
If rates stay the same in 12 month's time, which option would be your preference?

Many thanks

getmore4less

On this size mortgage the fees don't matter on the fixed as they are more than covered by the lower rates.
For that 2y fix it saves nearly £1k over the no fee rate.  the 5y its  £1,500 

Taking that tracker makes sense if the rates over 75% were a lot higher and you could hit it and then fix

That 1.59% tracker rate is good compared to today 80% 2y trackers
1.74% £999 fee
2.29% £0 fee 
What were the fixed rates for 80% when you took this?

Anyway if you fixed now with the 5y pay £920pm you would hit £181,500  just under 62% with a bit of help from HPI under the 60%

if you think rates wont change and went  for 2x2y  at Y4 (still paying £920pm)
5y fix  owe £189,618.14

2 x 2y fix    £188,110.60
save £1,500,  with a 3rd fee at Y5 still £1k ahead(if rates don't change)

There has been some good rates hitting the 60% market there is not a lot of room to squeeze much more
These rates are pretty much where they need to be as retentions   



 

liviboy

getmore4less said:

On this size mortgage the fees don't matter on the fixed as they are more than covered by the lower rates.
For that 2y fix it saves nearly £1k over the no fee rate.  the 5y its  £1,500 

Taking that tracker makes sense if the rates over 75% were a lot higher and you could hit it and then fix

That 1.59% tracker rate is good compared to today 80% 2y trackers
1.74% £999 fee
2.29% £0 fee 
What were the fixed rates for 80% when you took this?

Anyway if you fixed now with the 5y pay £920pm you would hit £181,500  just under 62% with a bit of help from HPI under the 60%

if you think rates wont change and went  for 2x2y  at Y4 (still paying £920pm)
5y fix  owe £189,618.14

2 x 2y fix    £188,110.60
save £1,500,  with a 3rd fee at Y5 still £1k ahead(if rates don't change)

There has been some good rates hitting the 60% market there is not a lot of room to squeeze much more
These rates are pretty much where they need to be as retentions   



 

Thanks for that.

The fixed rate for 3 and 5 years was around 1.94% if memory serves.
However as I knew/thought we would "breach" the 75% LTV within a couple of years I opted for the lower, albeit 2 year, tracker.
As we have now breached that and rates are where they are we would be looking to fix.
Your post makes lots of sense to me, so thank you!

getmore4less

That makes that tracker a good call at the time( a bit of luck maybe).
About a year ago base were 0.75% so tracker would have been 2.24% against that fix of 1.94%

If I thought I could hit 60% in 4 years with overpayments  I might go with the 2y rates
The 5y is an easy option and can forget about it for a while those kids don't get any cheaper.
With the ERC free switch do you hit the button now or wait a bit.