Fixed or Tracker?

tr26

Hi,

I'm buying a property and was going to go with a 2 year fixed rate from nationwide. It's 5.74%. it works out £1515 a month. 

Due to the latest forcasts not being as bad for the next 2 year as they were a couple of weeks ago I'm now considering a tracker at BoE+0.99%. This works out £1222 a month. 

What are people's opinions?

Thanks

jimjames

Prior to the financial crisis in 2008 I'd always gone for trackers or discounted rates as they were better. Since then fixed rates have been a cheaper option but I suspect we are reverting back to the situation from pre 2008 where trackers are a cheaper option but without the guarantee of fixed payments over that time period.

simon_or

Tracker x 2 year fix, I don't see the point of a 2 year fix. It'll most likely turn out to be more expensive over the 2 years and still leave you exposed to future interest rates at the end of 2 years.

Tracker x 5 year fix, there are good reasons to prefer one over the other.

If a tracker suits you, then I'd definitely also look at discounted variable mortgages from smaller building societies. Much lower rates than trackers and a good enough probability of them not passing on the BOE rate hikes.