BoE Rates have risen. Fix for 5 years or 2?

richard4796

Our fix deal is due to end in November. I'm unsure what to do, fix for 2 years, fix for 5 years, pay the get out fee and refix now and at a cheaper rate ((if BoE keeps putting up rates until then rates at the moment will the cheapest around). 


We are not due to move for a long long time, if ever. 

We also have just completed a home extension which should have increased the value of our home, but looking at rates now they arte approx 1 - 1.2% higher than what we are currently on  

K_S

@richard4796 If you're not likely to move at all then a 5 (or even 10) year fix might be worth considering.

Most mainstream remortgage offers are valid for 6 months so depending on when exactly your current fix ends in November, you should be able to secure a rate soon. With lenders like Nationwide, you can even 'reserve' a product for 90 days so along with a 6 month offer validity should comfortably take you to November.

Since you've had an extension done, do make sure that your broker or you (if direct) insist on a physical valuation.

richard4796

My wife is worried that fixing for such a long time we may be fixed into a rate that is much higher. And that actually by that time BoE rates may drop again. I'm not sure tbh. Confused.com 

simon_or

No one can say what will work out best as that depends on what route interest rates take. They are going up now, but who knows what'll be the situation in November 2024. The best you can do is pick a length that suits your attitude to risk and flexibility.

If you are someone that is happy getting the best rate available for you at the time, then perhaps a short fix.

If you value the certainty of a fix and having a known monthly payment for the foreseeable future will help you sleep better, then go for a longer fix.

rincha

This was also causing me anxiety and stress as i just couldn't make up my mind. Im no expert but 2 years is a long time if you think about it. In the last 2 years we have been though a global devastating pandemic and also the current Ukraine War. so anything can happen to be honest. 

I'm hoping that in the next 12-18 months the war is over with a negotiated peace deal, energy prices level off, and inflation settles down a bit closer to 2%. My prediction is that in 2 years time the average mortgage rate would be around 3-3.5%. 

Thrugelmir

richard4796 said:

My wife is worried that fixing for such a long time we may be fixed into a rate that is much higher. And that actually by that time BoE rates may drop again. I'm not sure tbh. Confused.com 

At the current time they appear to be heading only one way. 

propertyhunter

Look at what the Bank of England have said. A contraction in annual GDP next year of 0.25%, and then a similar increase for 2024. So the economic situation over the next couple of years is going to be difficult with inflation peaking in Q4 this year at 10.2%, and interest rate rises we've already seen unlikely to have been reversed in 2 years. However, as you say, you can't tell what can happen. It depends how much you value stability vs uncertainty. 

Thrugelmir

propertyhunter said:

Look at what the Bank of England have said. A contraction in annual GDP next year of 0.25%, and then a similar increase for 2024. So the economic situation over the next couple of years is going to be difficult with inflation peaking in Q4 this year at 10.2%, and interest rate rises we've already seen unlikely to have been reversed in 2 years. However, as you say, you can't tell what can happen. It depends how much you value stability vs uncertainty. 

BOE will be monitoring currency exchange rates. Some inflation is imported. Majority of trading in commodities globally is undertaken in US $. What action the US Federal Reserve takes in the months to come will influence global events. 

london21

Personally think 5 years is better at present unless looking to move in the short term.

Interest rates are only going up at present. 

Windofchange

We just went onto a 5 year and were considering 10, but didn't want to be locked in for that long in the end. It's tough as it isn't just the term, but add in any additional product costs and the such if you are looking at two years - i.e. you may end up paying 3 x product fees to remortgage if you head to another provider for a better deal. 5 years just worked best for us at present, and at the end of that we will hopefully be down another two LTV brackets at least which will shield us somewhat from interest rate rises unless they are going to really shoot up. 

dimbo61

Look on your lenders website for New deals for existing customers.
What LTV are you in ?
Will the new extension put you in a lower bracket ? 
Do you need the security of a longer fix ?
Will your career's mean you earn much more in 2/3/5 years ?
Will you inherent some money ? 
Will you retire ?
Can you afford to overpay ?