2 Year vs 5 Year Fix!

Altior

There was a window where 5 year fixes were pushing 6%. Personally I thought that was an opportunity that was unlikely to reappear for a long time. 

In my view these decisions are far more heavily influenced by the political discourse than the analysis of data. Higher rates are very difficult to sustain. We are pretty much also tied to the Fed. It seems a vanishingly small possibility of them hiking rates in election year with a Dem incumbent. What happens after the outcome in Nov is anyones guess. 

Londonlisa12

InvesterJones said:

Millyonare said:

£85k x 5 years at 5.00% = £108,484
£85k x 2 years at 4.53% = £92,875

You're going to need 5.35% (or more) in years 3, 4 and 5 to beat the 5-year deal (before tax).

Fwiw, consensus interest-rate forecasts right now for 2026-2029 suggest 3-4% is more likely than 5-6%. So, you'd (probably) end up with £2-8k less cash in 5 years' time.

Not advice, etc. Just playing with numbers. Dyor.

Always helps to play with the right numbers though The two year rate is 5%, the five year is 4.53%.

I was about to say the same😂😂

Millyonare

Londonlisa12 said:

InvesterJones said:

Millyonare said:

£85k x 5 years at 5.00% = £108,484
£85k x 2 years at 4.53% = £92,875

You're going to need 5.35% (or more) in years 3, 4 and 5 to beat the 5-year deal (before tax).

Fwiw, consensus interest-rate forecasts right now for 2026-2029 suggest 3-4% is more likely than 5-6%. So, you'd (probably) end up with £2-8k less cash in 5 years' time.

Not advice, etc. Just playing with numbers. Dyor.

Always helps to play with the right numbers though The two year rate is 5%, the five year is 4.53%.

I was about to say the same😂😂

It was a long day 🙈

subjecttocontract

boingy said:

I've never been very comfortable with any fix longer than a year. Sometimes you win, sometimes you lose, but locking any significant money away for 5 years is not to be undertaken lightly in my view. Other views are available!

Exactly the same for me. I never fix for more than 1 year. My uncle Del boy says this time next year we might be millionaires but even a year is a long time and circumstances can change. 

VNX

Personally, if you won’t need the money I’d fix for as long as you can but also spread your risk. Last year I fixed across 1/2/3/4/5 year fixes giving a nice income, benefitting from what I believe will be unbeatable rates in years 3/4/5 but not putting all my eggs into those baskets