Remortgage Dilemma

Sistergold

Am on a tracker which ends this June, have just accepted a switch to another 2yrs tracker tracking at 1.7% above base rate giving a current rate of 4.29%. I just can not fix at this point in time have also never wanted to fix as don’t want to be stuck with any particular product. Tracking has now been painful but it’s always a risk to track. 

housebuyer143

Sistergold said:

Am on a tracker which ends this June, have just accepted a switch to another 2yrs tracker tracking at 1.7% above base rate giving a current rate of 4.29%. I just can not fix at this point in time have also never wanted to fix as don’t want to be stuck with any particular product. Tracking has now been painful but it’s always a risk to track. 

1.7% above base is 5.7%? 

Londoncheesecake

Our low rate fixed ends in June and is going to increase to a very similar amount, just shy of £500.. we have 350k mortgage.

Our broker last week advised we go onto a tracker and sit on it for a while until the fixed rates reduce. (crystal ball talk but perhaps with a tracker we can opt out of it at any point if fixed reduces)

We have been offered by our current lender 4.34 with Tracker and 3.99 for 5 year fixed.

A 2 year fixed is higher rate than the tracker .

randomtom

Londoncheesecake said:

Our low rate fixed ends in June and is going to increase to a very similar amount, just shy of £500.. we have 350k mortgage.

Our broker last week advised we go onto a tracker and sit on it for a while until the fixed rates reduce. (crystal ball talk but perhaps with a tracker we can opt out of it at any point if fixed reduces)

We have been offered by our current lender 4.34 with Tracker and 3.99 for 5 year fixed.

A 2 year fixed is higher rate than the tracker .

How does the tracker work, is it 0.34% above base rate?

I've decided to take the 5 year fix at 3.98% because it looks like rates have bottomed out for the time being. My plan would be to possibly exit in year 4 and pay the 1% ERC if rates are adequately lower by then (you'd hope!)

ElwoodBlues

Nailer99 said:

I’m in the same situation. I’ve calculated that we will be better off with the 2 year if mortgage rates have come down to 3.25% or less by summer 2025. 

A few weeks ago some commentators were suggesting that rates might even reach 3%-ish rate by the end of this year, but now it’s not so certain. 

It’s a tricky one!

Another thing to factor in is that your house may lose value in 2 years so you could fall to a worse LTV band (we will, for sure!). 

I’m tempted by the security and lower short term payments of the 5 year but that also feels like admitting defeat!

I think it would be quite optimistic to think that rates would be below 3.25% by March 2025. Latest thinking is that they might not peak until the end of this year (was previously predicted to be middle of 2023), and go higher than recent thinking too. Swap rates appear to be stabilising after a rather turbulent period. Longer term, I think the powers that be at the central banks will be reluctant to make the same mistake of the long term rock bottom rates of the 2010's and they'll be aiming for the 3-5% range.

If there is nothing in it at current fixed rates, personally I'd take a 5 yr over a 2.

Raxiel

I'm in a sort of similar situation, with our current 5 year fix ending soon and our current provider offering us 4.18% fixed for 5 or 7 years with no fee or 2-3 years at 4.73%.

Our mortgage is pretty small compared to what most people here have, with about £55k outstanding.

They do have 3.99% for 5 years or 4.44 for 2, as well as tracker options but they all come with a £999 fee, which petty much sinks any saving the rate would give.

Same seems to go with moving to any other provider.

I came to the forum for a sanity check on the rates, and it seems they're pretty competitive. Just got to decide if I should go for another 5 years or pay an extra £16 a month in the hope of a better (or at least no worse) rate in 2 or 3 years.