Mortgage rates over the next 5 years

rolls1231301

HI all, I am currently in an owned house, and as a family, financially wise, we are incredibly boring - no store cards, credit cards or general debt, other than our mortgage.
We are looking to move, and would be looking to take on a much bigger mortgage to move to a much bigger house.  We have a budget in mind, and also monthly repayments that we are happy to pay - all good so far.
Our current lender has quoted 1.8%, and we are looking at another lender which is going to charge us 1.4% fixed for 2 years.  My earning potential is likely to go up in the next few years, but we are going to be pretty much maxed out to what we are happy to borrow as per the above, but have some concerns about, are we going to get stung after 2 years, and suddenly find ourselves in a position where we are going to double the interest rates and find ourselves at a much greater risk?

Does anyone have any idea about how the mortgage rates will fluctuate over the next say 5 years?

zemarcopolo

If anyone has an answer to your question,  that person has the potential to be among the richest people in the UK.
The thing is, people can predict,  but nobody knows what will happen to the market. 

getmore4less

Crunch some numbers to reduce the guessing required.

You have given no where enough useful information to scope out the options.

One strategy that can help is take a  longer term to give some headroom for rates going up.

clueless_but_curious

Just some thoughts you may or may not find useful...
The base rate was 0.75% when I got a 90% LTV mortgage at 1.8%.  If I took out a 90% mortgage today, I guess I would secure something like 1.8% with base rate at 0.1%.  I.e. the banks are taking a bigger margin for exactly the same lending (financial risk).
The BOE has not expressed anything to suggest that base rate is going to rise imminently. 
Assuming coronavirus is the reason for the increased financial risk in their margins, their spread (difference between base and product rate) should drop over the course of this year.  However, you would expect base rate to increase, responsively.  
Over the last 10 or 15 or 20 years, it has been cheaper to fix mortgages two years at a time.  However affordability changes and that is the risk/reward. 
I find it quite easy to plan 2 years ahead.  I struggle with 5

getmore4less

clueless_but_curious said:

Just some thoughts you may or may not find useful...
The base rate was 0.75% when I got a 90% LTV mortgage at 1.8%.  If I took out a 90% mortgage today, I guess I would secure something like 1.8% with base rate at 0.1%.  I.e. the banks are taking a bigger margin for exactly the same lending (financial risk).
The BOE has not expressed anything to suggest that base rate is going to rise imminently. 
Assuming coronavirus is the reason for the increased financial risk in their margins, their spread (difference between base and product rate) should drop over the course of this year.  However, you would expect base rate to increase, responsively.  
Over the last 10 or 15 or 20 years, it has been cheaper to fix mortgages two years at a time.  However affordability changes and that is the risk/reward. 
I find it quite easy to plan 2 years ahead.  I struggle with 5

Have a look that guess looks  way out.
Be lucky to find anything under 3%  even 85% are sitting around 2.0%-2.5%

clueless_but_curious

It was indeed a guess.  However my broker told me only in December his lowest 80% rate is 1.69%

Savingsfox

I’ve just signed a 5 year fixed deal today, the 2 year fixed options were not significantly cheaper in my view; my LTV is just over 50% so it depends on your circumstances - but the difference for me was only 0.1%; the biggest factor I would say to consider is product fees. My 5 year deal was £999, so compare that with taking a new product every 2 years costing £999 and it’s an extra £1500 pro-rata. Think about this aspect carefully alongside the deal in general. Personal opinion is I don’t expect any fluctuation in the rates in the next few years, but why should you take my opinion? Play around with hypothetical rates and make the decision that works best for you in terms of affordability - don’t second guess the market.

hippocrates1

clueless_but_curious said:

Just some thoughts you may or may not find useful...
The base rate was 0.75% when I got a 90% LTV mortgage at 1.8%.  If I took out a 90% mortgage today, I guess I would secure something like 1.8% with base rate at 0.1%.  I.e. the banks are taking a bigger margin for exactly the same lending (financial risk).
The BOE has not expressed anything to suggest that base rate is going to rise imminently. 
Assuming coronavirus is the reason for the increased financial risk in their margins, their spread (difference between base and product rate) should drop over the course of this year.  However, you would expect base rate to increase, responsively.  
Over the last 10 or 15 or 20 years, it has been cheaper to fix mortgages two years at a time.  However affordability changes and that is the risk/reward. 
I find it quite easy to plan 2 years ahead.  I struggle with 5

Lol 😂 90ltv is sitting at 3-5-4%

zemarcopolo

clueless_but_curious said:

Just some thoughts you may or may not find useful...
The base rate was 0.75% when I got a 90% LTV mortgage at 1.8%.  If I took out a 90% mortgage today, I guess I would secure something like 1.8% with base rate at 0.1%.  I.e. the banks are taking a bigger margin for exactly the same lending (financial risk).
The BOE has not expressed anything to suggest that base rate is going to rise imminently. 
Assuming coronavirus is the reason for the increased financial risk in their margins, their spread (difference between base and product rate) should drop over the course of this year.  However, you would expect base rate to increase, responsively.  
Over the last 10 or 15 or 20 years, it has been cheaper to fix mortgages two years at a time.  However affordability changes and that is the risk/reward. 
I find it quite easy to plan 2 years ahead.  I struggle with 5

Last time I checked,  the lowest rate for 90 LTV was 2.4% with Nationwide. 

Thrugelmir

clueless_but_curious said:

  If I took out a 90% mortgage today, I guess I would secure something like 1.8% with base rate at 0.1%.  I.e. the banks are taking a bigger margin for exactly the same lending (financial risk).

Covid has increased the financial risk significantly. Unemployment is expected to rise higher yet. Nor are house prices immune to a fall. 

getmore4less

clueless_but_curious said:

It was indeed a guess.  However my broker told me only in December his lowest 80% rate is 1.69%

How does that relate to a guess for a rate at 90% LTV?