Mortgage term ends in November...shall I get 2 or 5 year term?

CSL0183

Exact same position here with a 30th November renewal. Offered a 3.5% 5yr fix and a 3.7% 2yr fix. This is on an 80% LTV

Current BOE BR = 1.75% so a 5yr fix is at BR +1.75%

Market predictions of the BOE BR being at least 3.5% this time next year, add on the 1.75% and we are up at 5.25% for the same product. 

We are very likely to enter a recession so I think the rates will come down again sharpish when this happens and 2yrs will likely be enough to get through this (Will be January 2025 before renewal on the 2yr) 

Not sure what to do either personally. 

housebuyer143

CSL0183 said:

Exact same position here with a 30th November renewal. Offered a 3.5% 5yr fix and a 3.7% 2yr fix. This is on an 80% LTV

Current BOE BR = 1.75% so a 5yr fix is at BR +1.75%

Market predictions of the BOE BR being at least 3.5% this time next year, add on the 1.75% and we are up at 5.25% for the same product. 

We are very likely to enter a recession so I think the rates will come down again sharpish when this happens and 2yrs will likely be enough to get through this (Will be January 2025 before renewal on the 2yr) 

Not sure what to do either personally. 

Why are you adding base rate onto a 5yr FX? Base rate is only added onto a tracker?
Not sure if I have misread your post?

CSL0183

housebuyer143 said:

CSL0183 said:

Exact same position here with a 30th November renewal. Offered a 3.5% 5yr fix and a 3.7% 2yr fix. This is on an 80% LTV

Current BOE BR = 1.75% so a 5yr fix is at BR +1.75%

Market predictions of the BOE BR being at least 3.5% this time next year, add on the 1.75% and we are up at 5.25% for the same product. 

We are very likely to enter a recession so I think the rates will come down again sharpish when this happens and 2yrs will likely be enough to get through this (Will be January 2025 before renewal on the 2yr) 

Not sure what to do either personally. 

Why are you adding base rate onto a 5yr FX? Base rate is only added onto a tracker?
Not sure if I have misread your post?

You have misread and misunderstood. 

The BOE BR is currently 1.75% and I am being offered a 5yr fix at 3.5% so this is (1.75 above the BOE BR) - If the differential were to remain like this for my given LTV then it lets me know what I would be expected to pay should BOE BR increase to 3-4%. 

housebuyer143

CSL0183 said:

housebuyer143 said:

CSL0183 said:

Exact same position here with a 30th November renewal. Offered a 3.5% 5yr fix and a 3.7% 2yr fix. This is on an 80% LTV

Current BOE BR = 1.75% so a 5yr fix is at BR +1.75%

Market predictions of the BOE BR being at least 3.5% this time next year, add on the 1.75% and we are up at 5.25% for the same product. 

We are very likely to enter a recession so I think the rates will come down again sharpish when this happens and 2yrs will likely be enough to get through this (Will be January 2025 before renewal on the 2yr) 

Not sure what to do either personally. 

Why are you adding base rate onto a 5yr FX? Base rate is only added onto a tracker?
Not sure if I have misread your post?

You have misread and misunderstood. 

The BOE BR is currently 1.75% and I am being offered a 5yr fix at 3.5% so this is (1.75 above the BOE BR) - If the differential were to remain like this for my given LTV then it lets me know what I would be expected to pay should BOE BR increase to 3-4%. 

Ah ok. I see what you are doing 👍 in reality that is not how the rate figure is calculated as they go off so much more than base rate, which is why you got sub 1% rates in the past when base rate was 0,1%.

clueless_but_curious

housebuyer143 said:

Ah ok. I see what you are doing 👍 in reality that is not how the rate figure is calculated as they go off so much more than base rate, which is why you got sub 1% rates in the past when base rate was 0,1%.

Please elaborate

housebuyer143

clueless_but_curious said:

housebuyer143 said:

Ah ok. I see what you are doing 👍 in reality that is not how the rate figure is calculated as they go off so much more than base rate, which is why you got sub 1% rates in the past when base rate was 0,1%.

Please elaborate

Banks look at so many factors when deciding interest rates. They look at the market predictions, the swap rates, the base rate, volatility in the market and what their competitors are doing. 
So much goes into deciding the rate they charge you that it's impossible to make predictions about what they will be in 6 months or in a year. 
A few months ago they were charging 0.9% for a fix which was only 0.8% above base and today many lender's are charging 4.4% which is significantly higher than the 0.8% profit they had built in a few months ago. 
This is because they are unsure where the markets are going and need to ensure should rates continue to rise they do not lose out. Base could go up 0.5% next week, but there is no guarantee rates would follow this exact number.