Switch from Tracker to Fixed?

markuss91

Hi all,

I’m currently on a tracker with Nationwide which is 0.1% above BoE base rate (tracker rate currently 5.1% as of Sept 2024). It seems like this is expected to drop further in the current months but perhaps by 0.5% as a max, and will continue to drop in the coming years but maybe plateau around the 3.5% mark.

Obviously none of us have a crystal ball but based on the above, it seems attractive to switch to a 5yr fix with Nationwide which is currently 3.89% fixed (£995 fee too)? Usually no ERC on trackers too so I can switch easily enough.

Alternatively, is it worth holding for a few more months to see if fixes drop? I can’t see them dropping in line with how much the base rate is predicted to drop however, as surely fixes aren’t usually ~1% lower than BoE rate?

All I’m thinking is, it’ll take me a number of years before my tracker dips slightly below that fixed rate, and by that time I’ll be coming close to the end of that 5yr fix anyway to decide again?

The whole reason I opted for a tracker when my fixed deal ended in Aug 2024 was so I could see what happens and fixes weren’t good back then, but is now the time to pull the trigger on switching to a fix?

Part of me thinks these fixed mortgage rates of ~4% won’t change too much if the BoE rate drops soon, it’s like it’s already been factored in as the forecast for BoE to drop seems strong?

Any advice or insight welcome!

markuss91

One more thing to add is that my current mortgage is around £110,000, so the £995 charge does have a more significant effect than that of a larger mortgage.

I’m tempted to wait and see how interest rates go in 2025 before fixing. I feel like I’ve held on the last few months on a tracker and will soon see the benefit of that risk (and flexibility to switch) as they’re set to drop sharply.

Londoncheesecake

Hi, 
Im no expert but did similar and went onto a tracker in June 2023 as rates were not great back then. We have since locked in a 2 year fix a couple of weeks ago with our current tracker provider (Santander) at 3.99 for 2 years which will start early feb. 

I might add we have the ability to cancel/swap this deal until 2 weeks before this date or keep it.
My mortgage is over 3 times more than yours though!

markuss91

Thanks, I’ve now settled on waiting for the time being on the tracker but only whilst locking in a fix, which it sounds like you’ve done too, is this easy enough to do?

I was going to switch my mortgage to fixed via the app, presume I’d need to ring to lock in a fixed deal?

Londoncheesecake

I was able to do it all on the app which was really easy.