2 year fixed @ 4.86%?

alwaysgrowing

Hi folks

I got my first ever mortgage and fixed it at a delightful rate for 5 years, sadly this is now coming to an end.

We bought our home with support from the Northern Ireland Co-ownership scheme (which I highly recommend) but now we plan to buy them out.

My current mortgage is with a local NI Bank, I had expected to find a more competitive offer from one of the big UK-wide banks now that co-ownership isn't a factor but surprisingly AIB has had the best deal I have stumbled across - a 2 year fix at 4.86%  (I don't want to fix for more than 2 years and have been underhwlemed by variable offerings)

I guess I'm surprised a smaller NI bank would be really competitive....  just checking this is as competitive as I think it is and that im not missing something?  

Petriix

I'd strongly consider only fixing for 1 year at this point. I expect rates may come down over the next 12 months and you could likely get a cheaper fix next year. 

Emmia

Petriix said:

I'd strongly consider only fixing for 1 year at this point. I expect rates may come down over the next 12 months and you could likely get a cheaper fix next year. 

There is a risk rates fall, but rates could also go up, unfortunately none of us has a crystal ball.

As long as the OP can afford the payments, they should pick a fix for a duration they're happy with.

Newbie_John

Petriix said:

I'd strongly consider only fixing for 1 year at this point. I expect rates may come down over the next 12 months and you could likely get a cheaper fix next year. 

Well, the question is exactly when and by how much.
2 years at 4.86% and additional 3 years at 3.90% cost almost the same as 5 years at 4.40%.

Will the rates drop by more than 1% in 2 years time? We don't know.

There is also a chance they won't change much and you will have the same question in 2 years time
 

Hoenir

Newbie_John said:

Petriix said:

I'd strongly consider only fixing for 1 year at this point. I expect rates may come down over the next 12 months and you could likely get a cheaper fix next year. 

2 years at 4.86% and additional 3 years at 3.90% cost almost the same as 5 years at 4.40%.

Around 50% of remortgages are for 2 year fixes. Are many people's expectations of future mortgage interest rates overly optimistic? Little to no experience of the pre QE era.  

Personally I'd take the 5 year rate, Then overpay by the difference in monthly outgoings between the 2 and 5 year terms. Reducing the capital balance owed is the guaranteed way of reducing interest payable.