5 or 10 year fix?

Toonartist

I have no doubt it is a gamble, but the difference for us between the lowest Int Rate ever recorded and the 10yr fixed is £90 and the 10yr Fixed vs realistic BoE 5% +2% tracking is £230. That's £310 more than we were paying while @ 0.1% +2% tracking.  Quite a difference.

Don't forget, the current 5 - 10yr fixed rates were released before they expected int rates to rise to 5-6% in the next year. I wouldn't be surprised if they pull most of those rates in the near future. Once BoE Int Rate hits 5%, who knows what will happen but given the extraordinary circumstances it took to drop the rates below 2%, I'm not sure how long, if ever, it would take for them to drop that low again. 

In the end, we can easily afford an extra £90 a month and we have the comfort of not needing to worry about it again for 10 years so it was the right decision for us.

london21

Personally will go for 5 years.

10 years is such a long time, a lot can change and happen.

Toonartist

I agree, 10 years is a long time. Everyone will have. o look at their own situation and decide but, even if the rates drop to the lowest they can get, we're only paying £90 more and guaranteed not pay more for 10 years. If the BoE interest rates miraculously went back to 1%, we'd be paying £35 more. By the time the fixed rate ends, we'll owe £60k or less. At that point even if rates returned to the 5-8% level of times past etc... it will not be a big deal.

What I would say, if anyone is looking to fix 5 -10yrs, make sure it is a fully portable / flexible mortgage!

AndyJR

Thanks all, useful discussion. I booked a 5 year fix and plan to take advantage of unlimited overpayments. Not the best rate at 3.6%, but should be affordable and will be a good incentive to get the capital down over that period.

Whilst no one knows for sure I agree with your assessment toonartist. It does feel like we are perhaps seeing a return to the more normal rates of between 4 and 7% in terms of what has happened historically. There will be a lot of pain in this for borrowers in the context of cost of living, and prob a house price adjustment.

 Of course now I've said this next year we will go into depression and BoE will slash them back to 0.1%! Good old boom and bust.