Advice on what to do

Mobtr

My son & daughter in law’s fixed rate mortgage comes to an end 31/05/24. Currently with Barclays fixed at 2.14% for the last 5 yrs. 
Barclays have sent them the options to renew & some have £0 product fees while others range from £899-£1749. 

The options they are looking at all have zero fees. They’re thinking of possibly fixing for 1 yr at 4.9% which will give them the opportunity to fix again next yr when possibly the interest rates will be lower or a tracker + 0.5% above base rate so currently at 5.75%.  

Their mortgage is only about £64k (live in the NE & ex local authority house) & the difference between the 2 is only £30 per month. 

I know ultimately it is their decision but they have asked for advice. 

What does anyone on here think is their best option for now? 

pogg000

https://www.moneysavingexpert.com/mortgages/compare-fixed-rate-mortgages/

Have a play with mortgage tools

Mobtr

pogg000 said:

https://www.moneysavingexpert.com/mortgages/compare-fixed-rate-mortgages/

Have a play with mortgage tools

They’ve already done this sort of thing. They know what the repayments will be, just wanted advice on whether to fix for 1 yr or longer 

Hoenir

Given the size of the mortgage ignore products with fees attached. What longer term zero fee options are there available? 

Looking at the issue from another perspective. To reduce the interest bill pay the mortgage down quicker. That's something that there's total control over. Whereas future interest rate movements are little more than speculation over which there's none. 

Mobtr

Hoenir said:

Given the size of the mortgage ignore products with fees attached. What longer term zero fee options are there available? 

Looking at the issue from another perspective. To reduce the interest bill pay the mortgage down quicker. That's something that there's total control over. Whereas future interest rate movements are little more than speculation over which there's none. 

There are 2yr, 5yr & 10yr deals all around the same sort of interest rate figure. I know no one knows what the interest rate will be over the next couple of years which is why they’re thinking of a short term of tracker slightly above base rate. 

Regarding overpaying, I’ve been telling them to do that for the last 5 years but to no avail 

Hoenir

Without getting into technicalities. My personal view is that consumer borrowing rates will remain elevated even while the BOE base rate falls. BOE base rate being where the mainstream media focusses it's attention. Rather than the mechanics of how the funding of the mortgage market actually operates.  There's some way to go before "normalisation" is reached and we return to a market such as existed in an earlier era (i.e. prior to 2008).  

Trackers do have the advantage of being flexible and have no exit fees. Though at the current time are higher than say fixed 5 year rates. Opting for the fixed rate and overpaying the mortgage by the difference compared to the tracker rate. Is one way of finding a happy medium. 

Always has been an eternal coin toss what to do. 

. 

Emmia

Mobtr said:

pogg000 said:

https://www.moneysavingexpert.com/mortgages/compare-fixed-rate-mortgages/

Have a play with mortgage tools

They’ve already done this sort of thing. They know what the repayments will be, just wanted advice on whether to fix for 1 yr or longer 

Unfortunately none of us has a crystal ball - my husband for example last time we fixed (3 years ago) rejected my preference for a longer fix, so now we're looking at a rate of 5% ish as we need to fix again.

I doubt rates will drop back to 1-2% anytime soon.

The important part, is whether they can afford the payments required at the rate(s) available. The rest is essentially gambling that the right choice has been made at the time.