To fix or not to fix….

gjs6385

Hi,

We’re currently on a fixed rate of 2.44% that ends in just under 12 months.  I looked into rates fairly recently and the best were around 3.49% but now they’re obviously higher.

Given things could change quite a bit in that time I’m inclined not to apply for another fixed remortgage rate and just see how the market moves and perhaps look at moving to a SVR product once the fixed ends.  I just wondered what people’s views are as we won’t be the only ones in this position.

I’m also going to have about £50pm available to use shortly and can’t decide whether to start overpaying on the mortgage or use it to clear off finance quicker in preparation for remortgaging….again any suggestions would be most welcome.

Thanks.

Saint84

Tough question. Personally with the £50 spare, I would keep that aside and use it to mitigate the rates increases that you plan to incur in short term (after fixed expiry)

jimjames

If you have finance that charges a higher rate than the mortgage and savings accounts then it would make sense to clear that from a purely financial view

gjs6385

I’ve been fortunate enough to be able to clear all the finance and long term unsecured loan so this will hopefully come in useful if I decide to remortgage with another lender next year.

Also as it seems potential worst case scenarios had already been priced in to fix rate deals recently I’m not feeling too bad about staying on my current fix of 2.44% and just seeing how the land lies and what deals may be available from April onwards via my broker as they said I could lock in a deal from them as it’s 6 months from the end without paying an ERC.

I’m tempted to look at a discounted variable with no ERC if such a deal exists then or hopefully fixed rates may have dropped by then or at least by the end of September.  Does that sound like a sensible plan?

ElwoodBlues

I'm in exactly the same position, can't see any point fixing at current rates. Just use the remainder of your current fix to save/overpay as much as you can.

BarleyGB

I'm also in a similar position, ive done a lot of background reading, been looking at 10 year guilt price etc.  As I understand it, the the current trajectory is for rates to peek in mid to late 2023, then very slowly begin falling (but unlikely to settle near what we've been used to these last 10 years)

What's interesting about the current rates lenders offer, is that the reflect what the expected (spot price) for the the period of time you are fixing for, e.g. 2, 3, 5, 10 years etc.  I think we're now passed the shock of the mini-budget, the bad news is out, so the worst time to re-fix was to have panic'd in the last 4 weeks.  I think we'll see a small reduction in the 5 year fixed rates to reflect the anticipated softening of rates after 2023.

One important consideration is, can you book your new rate now and change your mind later, check with you lender, some allow this (Natwest), some don't (Santander), so if with Natwest, providing you opt to add any fee to the loan, you could reserve a new rate, e.g. 3.49% (with 3-6 months of your current rate end date), then if in a couple of months their rate has dropped e.g. 3.19%, you can potentially swap.

The above is all opinion, not advice, no one knows the future, there could be an escalation in Ukraine, potential problems in China which will impact the global economy/interest rates further.