5 year or 2 year at the moment?

logface100

If you were (or are) renewing your mortgage at the moment, would you go for a two year deal and look at the market again in two years or go with a 5?

I see differing reports on how long the current rates will last for. Some reports say high rates for a few years, making a 5 yr mortgage the better deal. In the office the other day, colleagues were saying they'd just get a two year deal as they expect by 2025 rates will be lower. I know nobody has a crystal ball, but what's the general wisdom? 

Exodi

I think it depends on the individual circumstances of the mortgage, their future outlook of the economy, and their personal appetite for risk.

There is a complicated interaction between the size of the mortgage and products with fees and without. Someone with a small mortgage is unlikely to consider a product with a fee, so the they're able to be open-minded about a 2/3/5/10 year fix. On a medium sized mortgage where the savings from paying a product fee outweigh the cost, it might not add up to stump up a grand for a product fee for a two year product and then need to stump up another grand in two years time. Someone with an absolutely enormous mortgage on the other hand the slightly difference in interest rate vastly negates the fee.

For example, you may find someone in their late 50's with a small mortgage recommending a five year fix (for peace of mind) because the difference in £ is relatively small and they prefer the comfort of a fixed payment amount.

You may find someone in their late 20's with an enormous mortgage preferring to take the risk with a two year fix.

Personally I'll probably switch to a 3 year fix when mines up in July-24.

Not because I think it's the best option, the middle-ground decision is mental gymnastics by me so I don't feel responsible for picking 2/5 years when it invariably ends up being the wrong decision.

Bald93

I locked in last year before silly season and had the same rate available at 5 years (with fee) and 7 years (no fee). 

We took the 7 year option. 

If you have no plans to move and can afford the 5 year payment I’d lock that in for certainty and assume that your earnings will have increased and rates reduced in 5 years time. 

But for me, knowing what I’ve got is set is reassuring and saves me having to worry about it in 18 months - 2 years time as that comes around quickly enough. 

Newbie_John

Arsenal or Tottenham on Sunday? 

It's a bet and you'll get people taking either option. Also the rates are adjusted to match the theoretical chances.
Some will lose, some will win.

london21

Personally going for 2 years fixed although the rate for 5 years is better.

I still have 6 months left on my mortgage so hoping by 2026 rates start to reduce a bit although looking back 2 years ago wished I had gone for 5 years.

Hard to know but go with what you are comfortable with. 

Ibits4321

I went for two years purely because there was a chance I'd have to sell the house in the near future. If that wasn't the case I would have gone for five years