5 or 10 year fix

SirMSE

Hello

Is there a consensus / view on fixing for 5 or 10 years now to lock in current rates (on remortgage)?

Will things be better in 5? Or better to avoid risk and fix for 10?

Or switch to a tracker?

Thanks

[Deleted User]

I am a FTB so situation is slightly different, but from what I've read, the consensus on the forums (whether talking about 2 year vs 5 year, or 5 year vs 10 year) is that the 5 year fix is (to quote Goldilocks) 'just right'. Obviously, there are exceptions to this.

For me personally, a decade is a long period of time during which so much can change, so I didn't want to make a decision based on the current, exceptional circumstances. For others, a ten year fix may provide the assurance and consistency they need and are therefore willing to risk the possibility of paying higher rates down the line.

With regards to variable/ tracker mortgages, this thread might be of help: https://forums.moneysavingexpert.com/discussion/6390384/will-2023-be-a-good-time-to-get-a-discount-mortgage#latest

B0bbyEwing

As a FTB 9 years ago, I locked in on 5 for certainty. I thought the rates can't really get any lower, they're already super low so locked in on another 5. The rates then went even lower before doing what they're doing now and this second 5yr lock ends next year for me. 

So back then, a 10yr fix wouldn't have been good as my 2nd 5yr worked out about 50-60 cheaper per month. 

In fact, looking back, variable would've been better. But my crystal ball was faulty. 

As for the next 10yrs with Covid fallout & everything else, who knows. 

Nationwide are offering me a 10yr fix at the same monthly payment as a 5yr fix. It's just whether the situation will be better in 5 years time than it is now... Or not. 

armadilloF150

Looking at historical BoE base rates, the ultra low rates of the past ~10 years have been the exception, not the rule. The current base rate is still only 2.25%. The historical average is around 6%.

If you forget everything else, and only consider the base rate history as a predictor for the future, then the probability of rates being higher in both 5 and 10 years is somewhat high.

The consensus among the fund managers I've talked to (who are generally more right than wrong) is that rates will go up for a couple of years, then come down. But the level they 'come down' to could easily still be where we are now, or still higher...

xzibit

It also depends on your circumstances. Remember locking yourself in for 5 years is a long time, a decade a very long time. 

We are applying for a 2 year fix just now as I feel uncomfortable committing to a 5 year term which would cost me thousands to get out of. 

In reality only you can answer this and know what you’re comfortable with.