New fixed rate or variable? 31 October 2022 at 11:43AM in Mortgages & endowments 24 replies 2.4K views

JMA74

I'd probably go on variable for a few months if i was in your shoes.   

I had a meeting with a TSB account manager who said that they are just keeping out the market at the moment as they had already hit all their lending targets before this all happened so have no need to compete.  Come the new year we might see them making more of an attempt at getting some business secured

Given the loan that you need to review is a smaller one you wont be massively impacted if rates improve but they are certainly a bit unattractive at the moment.

greyjoy70

JMA74 said:

I'd probably go on variable for a few months if i was in your shoes.   

I had a meeting with a TSB account manager who said that they are just keeping out the market at the moment as they had already hit all their lending targets before this all happened so have no need to compete.  Come the new year we might see them making more of an attempt at getting some business secured

Given the loan that you need to review is a smaller one you wont be massively impacted if rates improve but they are certainly a bit unattractive at the moment.

Thanks for the advice and insight re TSB. I did wonder why their rates are not very competitive compared to other lenders.

I am tempted to go variable but worried that the TSB variable will just keep going up with each rise over the next few months to 7%+ 

JMA74

could do, but how much is that actually going to cost you?  Even an extra 1% on a 20k loan is unlikely to be much more than £10 a month than you are looking at anyway.   I'd still hedge my bets that they will offer something more competitive in the coming months.

greyjoy70

I guess as you say it's not going to make a huge amount of difference on a small amount so I think I will just go onto variable and keep an eye on the market. I also plan to make some overpayments over the next few years to offset some of the increased interest.

greyjoy70

so to update TSB fixed rates have lowered to 4.99 2 years and 4.59 5 years.

Worth fixing with either of these deals before possible Feb 2 rise?

mdori003

Given the relatively low amount I'd be tempted to go for the security of the 5 year deal and not having to worry about it again for some time (or pay arrangement fees). The likelihood is that rates will come down after peaking in the next 12 months but is always a gamble and the base rate will certainly be at 4.5% at some point.

greyjoy70

mdori003 said:

Given the relatively low amount I'd be tempted to go for the security of the 5 year deal and not having to worry about it again for some time (or pay arrangement fees). The likelihood is that rates will come down after peaking in the next 12 months but is always a gamble and the base rate will certainly be at 4.5% at some point.

thanks, that's kind of what I was thinking. TSB variable rate that I'm currently on is already at 6.99 and no doubt will rise again if rates increase by another .5%.

MFWannabe

greyjoy70 said:

so to update TSB fixed rates have lowered to 4.99 2 years and 4.59 5 years.

Worth fixing with either of these deals before possible Feb 2 rise?

I’d be tempted to go with the 5 years, I personally think it will be quite some time before rates fall to below 4% again, but that is my opinion! 

DireEmblem

I'm currently contemplating similar... 3.69% variable or 4.54% fixed.  Fixed is 240pcm more than now

My third option is to overpay my mortgage now to keep my cashflow at existing levels(this would require say 40k).

Taking an overly simplistic view, 240*12/40k = 7.2% which is too close to the average long term investing rate of return of 8%.

Not sure I'm missing something - ok yes my capital/interest payments will be different, but I am keeping the term the same, so it seems a good idea to drawn down a little.

My only thought is that I would only invest the £240 anyway so is there any point in the drawdown to overpay the mortgage at this time?

mjstokes85

I fixed with accord for 5 years at 4.58%, tracker was 0.39% above base rate for 2 years, surely that will end up higher than the fix due to the impending rate rises this week and again in future. My thoughts were just fix it for 5 and not have to mess about again in 2 years stressing over what is best. It's only £50 a month more than I'm paying now and my payrises over the next 5 years will cover that easily.