How long to fix

Scouser85

Hi

We are 6 months away from our current fixed rate mortgage ending. Our broker has gotten us a few options. The longer you fix the better the rate. So is it currently better to fix for 2,3 or 5 years? Is 2 years possibly not enough for the rates to drop or is 5 years too many to sit in a fixed rate if the rates do drop.

These are the best options for us from our broker

2 years - 6.54% £950.93 month (387.90 more a month then currently paying)

3 years - 6.42% £938.83 month 

(£375.80 more a month then currently paying)

5 years - 5.71% £871.38 month 

(£308.35 a month more than currently paying)

CSI_Yorkshire

Scouser85 said:

Is 2 years possibly not enough for the rates to drop 

Possibly.

Scouser85 said:

is 5 years too many to sit in a fixed rate if the rates do drop.

Possibly.

Scouser85 said:

So is it currently better to fix for 2,3 or 5 years?

Nobody can tell you.  Nobody knows what is going to happen or how fast.  People can guess, but that's all it is.

If you want certainty for longer, take a longer fix even if it works out more expensive.  If you want flexibility, take a shorter fix or a tracker even if these are more expensive in the short term.

Timing the market is a mug's game.

Newbie_John

How many year you have left on your mortgage? Can you afford all these monthly rates?

If this are the rates with the same bank you currently are, you can accept one of them now and change to something else in 5 months time.. 
Pick one you feel is right and revisit it in 5 months time - check that with broker to know all the details.

Scouser85

We have 28 years left as we only took it out 2 years ago. 

Yes we can afford the rates but nearly doubling our mortgage is going to hurt us as won’t be able to do holidays, days out, meals out etc 

sevenhills

Scouser85 said:

2 years - 6.54% £950.93 month (387.90 more a month then currently paying)

3 years - 6.42% £938.83 month 

(£375.80 more a month then currently paying)

5 years - 5.71% £871.38 month 

(£308.35 a month more than currently paying)

It's a gamble, do you feel lucky?

Nationwide 10 year fix = 6.22%

https://better.co.uk/mortgages/fixed-rate?campaignid=20395266441&adgroupid=150368896983&feeditemid=&target=kwd-31991163&locationinterest=&locationphysical=9046151&matchtype=e&network=g&device=c&devicemodel=&mobile=&notmobile=[notmobile]&searchnet=[search]&displaynet=&adid=666972860557&keyword=10 year fixed rate mortgages&placement=&adposition=&utm_source=google&utm_medium=cpc&utm_term=10 year fixed rate mortgages&utm_campaign=&hsa_acc=5317582063&hsa_cam=20395266441&hsa_grp=150368896983&hsa_ad=666972860557&hsa_src=g&hsa_tgt=kwd-31991163&hsa_kw=10 year fixed rate mortgages&hsa_mt=e&hsa_net=adwords&hsa_ver=3&gclid=EAIaIQobChMIjcfCntjQgAMVDbPtCh0P4QDGEAAYBCAAEgK0YPD_BwE

Newbie_John

Scouser85 said:

We have 28 years left as we only took it out 2 years ago. 

Yes we can afford the rates but nearly doubling our mortgage is going to hurt us as won’t be able to do holidays, days out, meals out etc 

So 5 years is £80 cheaper than 2 years, that's nearly £1000 saved a year.

sevenhills said:

It's a gamble, do you feel lucky?

This is really the question.. In April (starting in Oct) I had a choice of 4.4% for 2 years or 4.08% for 5 years, I chose 2 years thinking that rates will drop before Oct and I could choose another cheaper rate before then. Now, I would have gone for 5 years.
Some people here think rates will remain around 5% forever, some believe they will drop to 2% in a year or two - and that's what their decision is based on. You'd need to factor chances of getting payrises in 5 years time etc.
There isn't a clear answer, 5 vs 2 offers £80 saving a year - that's nearly £1000.

[Deleted User]

If I was to fix will lean towards 3 years or 2.

If you want certainty then 5 years but rates might drop before 5 years.

Newbie_John

Also, as your mortgage is starting in 6 months, may be worth waiting?
https://www.bbc.co.uk/news/business-66459129

johnhenstock

I think we'll have mortgages at 3-4% by the end of the year...

Exodi

Those rates don't look great - who is the lender? Nationwide is offering cheaper rates than these even without a product fee and over 90% LTV. Do you have 'limiting' circumstances that prevent you from shopping around?

There is a another option you've left out - switching to a tracker deal and fixing in the future.

No-one can tell you what to do, this is classic risk vs reward and obviously your ability to absorb increasing costs is relevant. Personally, I'd be reluctant to fix for a relatively long time at current rates.

MFWannabe

Scouser85 said:

We have 28 years left as we only took it out 2 years ago. 

Yes we can afford the rates but nearly doubling our mortgage is going to hurt us as won’t be able to do holidays, days out, meals out etc 

Who is the lender? Some have announced they will be reducing rates