Fixed rate or tracker rate?

aimee_coop

Hi all,

My 2-year fixed rate is ending soon and now I need to remortgage. 
The current 2-year fixed rate the bank offers is 5.88% and the 2-year tracker rate is 6.74%
Rumour has it that the rate will go down this year but we can never know when and how much.
Should I go for fixed rate or tracker rate?
Any advice would be appreciated.
Thank you.

BarelySentientAI

Work out how much more expensive the tracker is per month than the fix.

Work out how much the tracker would need to drop, and when, to make it cheaper.

Then you will have your answer.

BikingBud

aimee_coop said:

Hi all,

My 2-year fixed rate is ending soon and now I need to remortgage. 
The current 2-year fixed rate the bank offers is 5.88% and the 2-year tracker rate is 6.74%
Rumour has it that the rate will go down this year but we can never know when and how much.
Should I go for fixed rate or tracker rate?
Any advice would be appreciated.
Thank you.

Ask those fuelling the rumours if they will underwrite your decision or see if you can find Johnny Shoe Shine Guy for a reputable source:

"What's the word on the street, JOHNNY?"

london21

I went for fixed which started in February.

If going for fix will go for 2 years max.

Think rates will come down but hard to know when exactly, maybe next year, 

Newbie_John

aimee_coop said:

Hi all,

My 2-year fixed rate is ending soon and now I need to remortgage. 
The current 2-year fixed rate the bank offers is 5.88% and the 2-year tracker rate is 6.74%
Rumour has it that the rate will go down this year but we can never know when and how much.
Should I go for fixed rate or tracker rate?
Any advice would be appreciated.
Thank you.

Rumor was that it would start going down by the end of last year.. now it's this year..

Nobody can promise you that in 2 years it will be cheaper than is now.

BonaDea

You shouldn't make this decision on the basis of conjectures about what interest rates might or might not do at various points in the future. You should make it on the basis of how big a buffer you have, given your net income and net wealth.  If you have loads of slack in your budget, such that even if rates went up substantially from where they are now it wouldn't cause you any financial difficulty, go with the tracker.  Otherwise take a fix.

ReadySteadyPop

BikingBud said:

aimee_coop said:

Hi all,

My 2-year fixed rate is ending soon and now I need to remortgage. 
The current 2-year fixed rate the bank offers is 5.88% and the 2-year tracker rate is 6.74%
Rumour has it that the rate will go down this year but we can never know when and how much.
Should I go for fixed rate or tracker rate?
Any advice would be appreciated.
Thank you.

Ask those fuelling the rumours if they will underwrite your decision or see if you can find Johnny Shoe Shine Guy for a reputable source:

"What's the word on the street, JOHNNY?"

Likely same people or paid by the people who sell the mortgage debt?  "Of course your debt will get cheaper next year, the interest rate will drop soon......sometime........any minute now!"

ReadySteadyPop

BonaDea said:

You shouldn't make this decision on the basis of conjectures about what interest rates might or might not do at various points in the future. You should make it on the basis of how big a buffer you have, given your net income and net wealth.  If you have loads of slack in your budget, such that even if rates went up substantially from where they are now it wouldn't cause you any financial difficulty, go with the tracker.  Otherwise take a fix.

Fix for longer would be my advice, those are very cheap rates you are quoting.

BarelySentientAI

ReadySteadyPop said:

BonaDea said:

You shouldn't make this decision on the basis of conjectures about what interest rates might or might not do at various points in the future. You should make it on the basis of how big a buffer you have, given your net income and net wealth.  If you have loads of slack in your budget, such that even if rates went up substantially from where they are now it wouldn't cause you any financial difficulty, go with the tracker.  Otherwise take a fix.

Fix for longer would be my advice, those are very cheap rates you are quoting.

How well has your advice worked over the last decade?  Or is it longer now?

Those are not very cheap rates.  They're not expensive either, by any means, but try and stay somewhere inside reality.

ReadySteadyPop

BarelySentientAI said:

ReadySteadyPop said:

BonaDea said:

You shouldn't make this decision on the basis of conjectures about what interest rates might or might not do at various points in the future. You should make it on the basis of how big a buffer you have, given your net income and net wealth.  If you have loads of slack in your budget, such that even if rates went up substantially from where they are now it wouldn't cause you any financial difficulty, go with the tracker.  Otherwise take a fix.

Fix for longer would be my advice, those are very cheap rates you are quoting.

How well has your advice worked over the last decade?  Or is it longer now?

Those are not very cheap rates.  They're not expensive either, by any means, but try and stay somewhere inside reality.

My advice to people that interest rates can go up very quickly was obviously spot on, the rates are historically very cheap, it is just that people are borrowing too much for their property, that is the issue.

BarelySentientAI

ReadySteadyPop said:

BarelySentientAI said:

ReadySteadyPop said:

BonaDea said:

You shouldn't make this decision on the basis of conjectures about what interest rates might or might not do at various points in the future. You should make it on the basis of how big a buffer you have, given your net income and net wealth.  If you have loads of slack in your budget, such that even if rates went up substantially from where they are now it wouldn't cause you any financial difficulty, go with the tracker.  Otherwise take a fix.

Fix for longer would be my advice, those are very cheap rates you are quoting.

How well has your advice worked over the last decade?  Or is it longer now?

Those are not very cheap rates.  They're not expensive either, by any means, but try and stay somewhere inside reality.

My advice to people that interest rates can go up very quickly was obviously spot on, the rates are historically very cheap, it is just that people are borrowing too much for their property, that is the issue.

No more than a couple of weeks ago you were trying to argue that rates have now reached their long term average and will probably stay where they are because of that.

Now you're saying that the rates are "very cheap".

Which is it?