What would you do

tony863

I recognise no one has a crystal ball, but just looking for opinions outside of my own research. £226k mortgage to renew end Dec, meaning I can lock something in this week. Currently paying £1270 and will have 17yrs left.

Research suggests the higher rates are likely to stay, so I'm reluctant to opt for a tracker, which leaves me with fixed rate. I've watched rates across lenders and they've increased by 0.25 to 0.5% this week alone! Current offers suggest:

2yr and 3yr fixed approx 5.5% (+£450)
5yr fixed approx 5.05% (+£393)
10yr fixed approx 4.60% (+£330)

I'm having to sell my car, quit my savings contributions and reduce my streaming/TV subscriptions to afford the increase. No wage rises on the horizon and I'm not able to extend the period of the mortgage. 

I've come to terms with the situation, but I'm concerned rates will still be high, possibly higher in 2yrs time. Some articles I've read quote the average interest rate being 7.10% and suggesting long term rates (ie over the next 5yrs) will be at 4% with 6.50% peaks over the next 12-18m which may stay around for a long period after. 

Initial thoughts were to fix for 2yrs and hope they reduced, but the 5yr feels safer and the 10yr doesn't look too bad in the grand scheme of things. I don't like the thought of any of them, but my brain is frazzled trying to come to some kind of best guess scenario. 

Newbie_John

Optimists would go for 2 years, pessimists for 5, people who know they won't move in 10 years and want to avoid similar drama in the future would go for 10..

There isn't one answer for all. Really depends what you can afford. You can always lock into something now and change your decision later on.

tony863

Thanks John, I don't disagree with your summary. You never mentioned 3yrs... Maybe that's the sensible choice

Sarah1Mitty2

tony863 said:

I recognise no one has a crystal ball, but just looking for opinions outside of my own research. £226k mortgage to renew end Dec, meaning I can lock something in this week. Currently paying £1270 and will have 17yrs left.

Research suggests the higher rates are likely to stay, so I'm reluctant to opt for a tracker, which leaves me with fixed rate. I've watched rates across lenders and they've increased by 0.25 to 0.5% this week alone! Current offers suggest:

2yr and 3yr fixed approx 5.5% (+£450)
5yr fixed approx 5.05% (+£393)
10yr fixed approx 4.60% (+£330)

I'm having to sell my car, quit my savings contributions and reduce my streaming/TV subscriptions to afford the increase. No wage rises on the horizon and I'm not able to extend the period of the mortgage. 

I've come to terms with the situation, but I'm concerned rates will still be high, possibly higher in 2yrs time. Some articles I've read quote the average interest rate being 7.10% and suggesting long term rates (ie over the next 5yrs) will be at 4% with 6.50% peaks over the next 12-18m which may stay around for a long period after. 

Initial thoughts were to fix for 2yrs and hope they reduced, but the 5yr feels safer and the 10yr doesn't look too bad in the grand scheme of things. I don't like the thought of any of them, but my brain is frazzled trying to come to some kind of best guess scenario. 

Are you sure? The new "rules" the government would like banks to agree to are all about extending the debt and giving people space to pay, IMO you should investigate and keep up to date with developments on this, as the debt crisis gets worse the government will be under MASSIVE pressure to keep people in their homes by getting the banks to back off a bit. As to what you should do........fix for 10yr ASAP in my opinion, that is a super low rate by historical standards.

Jimmyc

It’s tough, you are in similar situation to us, we can’t extend our mortgage term either unless we want to work into our 70’s. 

It’s going to be very tough for us, we are preparing ourselves, paying off credit cards etc. 

I expect we will go for a 5 year fix, the situation is really depressing, I try and not think about it. 

We will have no disposable income, no take aways, no holidays, no days out, no new clothes. 

I think interest rate raises will penalise some people, lucky people will have long fixes and won’t get penalised. 

People with no mortgages and loads of savings will obviously get richer. 

I won’t be getting a pay rise this year, maybe 2%

There has to be another way to tackle inflation, a VAT hike would penalise everyone the same and slow down spending, and would even help bring down the country’s debt. 

Sarah1Mitty2

Jimmyc said:

It’s tough, you are in similar situation to us, we can’t extend our mortgage term either unless we want to work into our 70’s. 

It’s going to be very tough for us, we are preparing ourselves, paying off credit cards etc. 

I expect we will go for a 5 year fix, the situation is really depressing, I try and not think about it. 

We will have no disposable income, no take aways, no holidays, no days out, no new clothes. 

I think interest rate raises will penalise some people, lucky people will have long fixes and won’t get penalised. 

People with no mortgages and loads of savings will obviously get richer. 

I won’t be getting a pay rise this year, maybe 2%

There has to be another way to tackle inflation, a VAT hike would penalise everyone the same and slow down spending, and would even help bring down the country’s debt. 

Why should everyone be "penalised" though, high house prices are the biggest cost of living increase for most people and that has been caused by people over-borrowing for houses, it makes sense to stamp that behaviour out before thinking about tax hikes etc.?

MFWannabe

tony863 said:

I recognise no one has a crystal ball, but just looking for opinions outside of my own research. £226k mortgage to renew end Dec, meaning I can lock something in this week. Currently paying £1270 and will have 17yrs left.

Research suggests the higher rates are likely to stay, so I'm reluctant to opt for a tracker, which leaves me with fixed rate. I've watched rates across lenders and they've increased by 0.25 to 0.5% this week alone! Current offers suggest:

2yr and 3yr fixed approx 5.5% (+£450)
5yr fixed approx 5.05% (+£393)
10yr fixed approx 4.60% (+£330)

I'm having to sell my car, quit my savings contributions and reduce my streaming/TV subscriptions to afford the increase. No wage rises on the horizon and I'm not able to extend the period of the mortgage. 

I've come to terms with the situation, but I'm concerned rates will still be high, possibly higher in 2yrs time. Some articles I've read quote the average interest rate being 7.10% and suggesting long term rates (ie over the next 5yrs) will be at 4% with 6.50% peaks over the next 12-18m which may stay around for a long period after. 

Initial thoughts were to fix for 2yrs and hope they reduced, but the 5yr feels safer and the 10yr doesn't look too bad in the grand scheme of things. I don't like the thought of any of them, but my brain is frazzled trying to come to some kind of best guess scenario. 

My choice would be 5 year but it’s very personal choice
There’s no standard answer 
Are you likely to want to move? 

How do you think rates will be in 2 and 5 years time? 

Choose the option based on the above and which you feel most comfortable with

RelievedSheff

Of those I would go with the ten year fix. 

That really isn't a bad rate at all.

I would make sure the lender allows porting though.

simon_or

tony863 said:

I recognise no one has a crystal ball, but just looking for opinions outside of my own research. £226k mortgage to renew end Dec, meaning I can lock something in this week. Currently paying £1270 and will have 17yrs left.

Research suggests the higher rates are likely to stay, so I'm reluctant to opt for a tracker, which leaves me with fixed rate. I've watched rates across lenders and they've increased by 0.25 to 0.5% this week alone! Current offers suggest:

2yr and 3yr fixed approx 5.5% (+£450)
5yr fixed approx 5.05% (+£393)
10yr fixed approx 4.60% (+£330)

I'm having to sell my car, quit my savings contributions and reduce my streaming/TV subscriptions to afford the increase. No wage rises on the horizon and I'm not able to extend the period of the mortgage. 

I've come to terms with the situation, but I'm concerned rates will still be high, possibly higher in 2yrs time. Some articles I've read quote the average interest rate being 7.10% and suggesting long term rates (ie over the next 5yrs) will be at 4% with 6.50% peaks over the next 12-18m which may stay around for a long period after. 

Initial thoughts were to fix for 2yrs and hope they reduced, but the 5yr feels safer and the 10yr doesn't look too bad in the grand scheme of things. I don't like the thought of any of them, but my brain is frazzled trying to come to some kind of best guess scenario. 

It depends on the individual tbh.

I would look at remortgaging to a bank that allows me to extend the term to 80 (to minimise the jump in monthly payments while still leaving me the option to overpay) and take the 2 or 5 year fix. 10 years is just too long for me individually and you would have to depend on being able to port for the amount that you need based on the banks affordability and policies at some time in the future.

For next time, put a reminder for 8-9 months before the end of your fix. With a fixed rate ending on 31st December, you could have booked a Nationwide rate with a decision in principle back in May when rates were much lower and then reassess your options in July.

comeandgo

You could try and extend your payback years, if say in 5 years time you are in a better financial position then overpay to reduce the time or get another deal and take a number of years off the mortgage.  

Maka344

simon_or said:

tony863 said:

I recognise no one has a crystal ball, but just looking for opinions outside of my own research. £226k mortgage to renew end Dec, meaning I can lock something in this week. Currently paying £1270 and will have 17yrs left.

Research suggests the higher rates are likely to stay, so I'm reluctant to opt for a tracker, which leaves me with fixed rate. I've watched rates across lenders and they've increased by 0.25 to 0.5% this week alone! Current offers suggest:

2yr and 3yr fixed approx 5.5% (+£450)
5yr fixed approx 5.05% (+£393)
10yr fixed approx 4.60% (+£330)

I'm having to sell my car, quit my savings contributions and reduce my streaming/TV subscriptions to afford the increase. No wage rises on the horizon and I'm not able to extend the period of the mortgage. 

I've come to terms with the situation, but I'm concerned rates will still be high, possibly higher in 2yrs time. Some articles I've read quote the average interest rate being 7.10% and suggesting long term rates (ie over the next 5yrs) will be at 4% with 6.50% peaks over the next 12-18m which may stay around for a long period after. 

Initial thoughts were to fix for 2yrs and hope they reduced, but the 5yr feels safer and the 10yr doesn't look too bad in the grand scheme of things. I don't like the thought of any of them, but my brain is frazzled trying to come to some kind of best guess scenario. 

It depends on the individual tbh.

I would look at remortgaging to a bank that allows me to extend the term to 80 (to minimise the jump in monthly payments while still leaving me the option to overpay) and take the 2 or 5 year fix. 10 years is just too long for me individually and you would have to depend on being able to port for the amount that you need based on the banks affordability and policies at some time in the future.

For next time, put a reminder for 8-9 months before the end of your fix. With a fixed rate ending on 31st December, you could have booked a Nationwide rate with a decision in principle back in May when rates were much lower and then reassess your options in July.

Out of interest, which banks allow you to extend until you're 80? Thanks