Are 10 year fixeds bonkers?

Sistergold

1. One other problem of fixing is interest rates going down and you being stuck on a higher rate
2. needing to sell due to - need to relocate - partnership break up - other Unkown changes of circumstances and all above mentioned scenarios 

10 years seem such a long time to fix for but this is from someone who never fixes though so I am always taking a chance and don’t mind the ups or downs of my mortgage rates. I only take 2year deals and I always choose a tracker. If I had to take a fixed it will also be 2yrs. 

Having said that we are living in unusual times of inflation and fixing seems to be the way to go, in your case I would say 5years. 10yr for me is a no no.  

Sistergold

Please read this https://forums.moneysavingexpert.com/discussion/6357761/mortgage-erc-horror-story

Thrugelmir

Sistergold said:

1. One other problem of fixing is interest rates going down and you being stuck on a higher rate

That's unlikely at current levels of interest rates. They have been exceptional for the past decade but there was good reason. 

fewcloudy

Sistergold said:

1. One other problem of fixing is interest rates going down and you being stuck on a higher rate

This is true, though more annoying than a problem when interest rates are low anyway. But I do agree with you.

When interest rates used to be around 5-6%, a good friend of mine was pleased to be able to fix at around 7% for the lifetime of his remaining mortgage (8 yrs). This was 2008/9.

Peace of mind and all that…

He had to buy the product so money spent there. Then for a year or so he paid a little bit more than he would have done if he hadn’t fixed, fair enough. And for the last 6 years he was pretty sick about it as the interest rate dropped lower that anyone predicted.

(He actually would’ve been a good candidate to take the hit on the large ERC to remortgage but didn’t, as there had been a big change in circumstances in terms of the ill health of partner and change in income).

Around the same time as he did this I started a lifetime tracker and that worked out well for me.

As far as I’m concerned, for the typical man in the street it’s a coin toss what you do. None of us were financially savvy and both used a (different) broker at remortgage time over the years. We each could easily have done what the other did.

simon_or

Sistergold said:

1. One other problem of fixing is interest rates going down and you being stuck on a higher rate
2. needing to sell due to - need to relocate - partnership break up - other Unkown changes of circumstances and all above mentioned scenarios 

10 years seem such a long time to fix for but this is from someone who never fixes though so I am always taking a chance and don’t mind the ups or downs of my mortgage rates. I only take 2year deals and I always choose a tracker. If I had to take a fixed it will also be 2yrs. 

Having said that we are living in unusual times of inflation and fixing seems to be the way to go, in your case I would say 5years. 10yr for me is a no no.  

I'm not alone then! I do the same thing, be it for my home or BTL mortgages, 2 years every time though it's a fix in most cases.

Have a remortgage coming up soon, this time I'll probably go for a 2 year discount.

doraspenlow

fewcloudy said:

Loss of income, which could be through ill-health, death, redundancy, fired, employer folds etc.  And the ill-health/death need not necessarily be either of you two; it could be family that requires you to relocate, a change in employment that requires you to relocate etc. Sometimes in a hurry.  So maybe not so much wanting to move house, as having to move house....

So you might be facing a large ERC, though to be fair in some of those scenarios a large ERC might be the least of your worries

Sorry, missed this. Yes, it's all these kind of scenarios that are difficult to imagine, aren't they. This is exactly the kind of list I need.

Sistergold

I know things are looking bleak as far as interest rates are concerned. A tracker has always had better rates than fixed as with fixed there is the assurance so you always pay more. I don’t really operate from the point of fear to such an extent that I will fix anything for 5yrs let alone 10years. I feel every 2 years it’s good to review things good or bad. The life of a mortgage is so long I accept there will be highs and lows. As long as my 2 years tracker is discounted then I am fine with it going up or down. I would hate to review my life situation and start having to pay an early repayment charge at all. For example I have been wanting to overpay a bit more onto my mortgage but I am not due to the discounted tracker I have will charge me 1% ERC 1st year and 0.5% 2nd year. So I am now waiting for end of product which thankfully was 2yr product. So even with a tracker the bank still had a fix element to it as it’s better for them when everything is fixed. 

The difference in % rates for fixed vs tracker I find them to be enough savings over time in favour of tracker and also accommodating the ups and downs. 

2yrs whether fixed or tracking is the most I will fix for I could possibly consider 3yrs. 10 years I don’t see how that can even be a consideration? How can you fix life for 10yrs? Change is the only sure thing in life. One really needs to allow and accept change good or bad. 

This is just an opinion and fixing for 10 is also another opinion and might have worked for some just airing another point of view to consider. 

Sistergold

Thrugelmir said:

Sistergold said:

1. One other problem of fixing is interest rates going down and you being stuck on a higher rate

That's unlikely at current levels of interest rates. They have been exceptional for the past decade but there was good reason. 

And I do agree with that and I don’t have a problem with fixing, but with all this do you then fix for 10yrs? The length of the fix is what is in question? Or is it not? 

t1redmonkey

Sistergold said:

1. One other problem of fixing is interest rates going down and you being stuck on a higher rate
2. needing to sell due to - need to relocate - partnership break up - other Unkown changes of circumstances and all above mentioned scenarios 

Both of the above points applied to me unfortunately!

I remortgaged to a 10 year fixed in 2018.  I got a 2.29% rate which I thought was a good idea as there was a lot of talk about interest rates rising above this within the next couple of years.  Turns out that never happened, and by the time I sold a couple of months ago, I don't think I was ever on a better rate than people who'd have just gone on a variable rate or a shorter fixed rate for the whole duration (2018-2022).

I also got hit by a 6% ERC for selling in the first 5 years, so all in all, not a good decision!  Obviously though today is different to 2018, there wasn't crazy inflation back in 2018, so it seems more likely that the rising interest rate predictions will come true this time round, so maybe it is worth it if you can get a reasonable rate.

Thrugelmir

Sistergold said:

Thrugelmir said:

Sistergold said:

1. One other problem of fixing is interest rates going down and you being stuck on a higher rate

That's unlikely at current levels of interest rates. They have been exceptional for the past decade but there was good reason. 

And I do agree with that and I don’t have a problem with fixing, but with all this do you then fix for 10yrs? The length of the fix is what is in question? Or is it not? 

I suspect that many people aren't prepared for how high interest rates may rise. There's a false sense of security that rates cannot possibly increase sharply.