What's the forecast/outlook? Mortgage renewal time.

B0bbyEwing

I have to say, you guys gave pretty sound responses (I'll stop short of saying advice) when I needed it on the last renewal. As I don't really know what those 'in-the-know' are best guess predicting going forward, I'm here to just try get some responses on it.

To be honest we like to stay with fixed rate, the question really is just how long for. If we had a working crystal ball then this over the years will have worked out dearer for us than going variable but regardless, we just prefer the safety of a fixed rate.

Bought the house in late 2013 & went 5yr fixed on 3.19% as we thought well it can't get much lower than that.

5yrs later when the deal ended, we were looking at 2.14%. Shows what we knew. So fixed in at that for another 5yrs.

Nationwide for the record.

That came to an end at the wrong time as things started going up a few months before we could lock in on anything decent. The response here was it should ease back in 2yrs time so that's what I did - locked in on a 2yr fixed at 5.76% paying more than I had been doing with my very first payment 10 years previous


And so here we are - approaching the end of that 2 yr fixed which is at the end of September this year.

If I'm to stay with Nationwide then I can apply to switch in 3 weeks time. 

Just running the numbers via Nationwide's calculator I'm looking at*

2yr: 4.29%
3yr: 4.24%
5yr: 4.09%
10yr: 4.59%

* obviously at todays rates, which I can't lock in on because I have to wait 3 weeks to avoid a charge.

Where do those who keep their ears to the ground think things are heading going forward?

I know it's all crystal ball like but I don't want to lock in on a 5yr if in 2yrs the masses think we'll be looking at 1% (I'm being extreme to make a point there, I don't realistically expect 1%) but at the same time I don't want to be locking in on a short 2yr just to hold out for a fraction of a percent - say for it to drop to 4.08% in the above case.


Just to be clear - am I expecting someone to give me the golden ticket answer? No. I know it doesn't exist. I'm just looking to see where the masses see the rates going over the next few years as they got it quite right last time I asked.

Newbie_John

I think you/we should make a decision based on:
1.Can you afford all these rates?
2.Are you planning to live there for 2/3/5 years?
3.Are there any fees included? (2 x 5 years with £1000 fee is £2000, but 5 x 2 years with £1000 fee is £5000 for the same period)

The rates are adjusted that way 5 is cheaper than 2 and 3 as banks think the rates will go down slightly.

I've been following topic like this for the past 2-3 years and based on most people assumptions we should have been under 3% by now 😅

So you see, ignore guesses - pick what's best now.

lfc321

 I can’t really answer the question, but don’t forget that the best guesses of the professionals on where interest rates will go are already built into the above rates. As you can see, their guess is for slow and relatively minor drops in rates over the next 2-3 years. (Beyond that is pure guesswork if you ask me). 

FWIW, we have just fixed ours for three years - but that is more driven by life circumstances (kid at uni meaning the certainty of a fixed rate for the next 3 years  is important for us) rather than any insight on interest rates. I mention this just to show that the rate itself is not the only consideration - other things might also matter, especially when the differences between the rates are so small.  

Hoenir

B0bbyEwing said:

Just to be clear - am I expecting someone to give me the golden ticket answer? No. I know it doesn't exist. I'm just looking to see where the masses see the rates going over the next few years as they got it quite right last time I asked.

Not to where they've been in the post GFC QE era (2008 - 2022). I'd be surprised if mortgage rates generally fell any lower from where they are now. The greater risk is that some unexpected event will actually push them higher. 

B0bbyEwing

Newbie_John said:

I think you/we should make a decision based on:
1.Can you afford all these rates?
2.Are you planning to live there for 2/3/5 years?
3.Are there any fees included? (2 x 5 years with £1000 fee is £2000, but 5 x 2 years with £1000 fee is £5000 for the same period)

The rates are adjusted that way 5 is cheaper than 2 and 3 as banks think the rates will go down slightly.

I've been following topic like this for the past 2-3 years and based on most people assumptions we should have been under 3% by now 😅

So you see, ignore guesses - pick what's best now.

I think you weren't actually directly & was just putting it across as points I should consider but to answer all the same...

1) Yes but it obviously doesn't mean I WANT to be paying the highest amount.
2) Until I die .... unless I can get a detached house at a good price - a price that >I< think is a good price. 
3) They're a fair comparison - in that I didn't take one year with a £999 fee & compare it to another year with £0 fee. 


I also fully expected people to say ignore other people & their forecasts/opinions. Maybe I just got lucky last time round when I asked here because generally people don't like to put forward their opinions on questions like these but they did back then ... and they were generally right. Maybe they said rates would drop to 3.13% but they only dropped to 4.28% so in that sense they were wrong but they dropped & dropped from what I was paying - which is what I was looking for.

Newbie_John

Well 2 years ago I had a choice 4% for 5 years or 4.4% for 2 years.
Asked question here.
Was adviced 2 years as rates are expected to be below 3% in mid 2025.

Looking at rates now they're about the same.

A lot can happen - have a look at 2021 with rates below 0% and 2023 with rates 6%. Nobody predicted Covid, nobody predicted russian war... 

These are just general guesses - sometimes we right, sometimes we're wrong.   

Hoenir

For context below is the BOE history since January 2000. Probably the most simplistic visual chart that illustrates impact of the GFC that commenced in 2007. How base rate how turned upwards in 2018 but was then reduced to cope with the pandemic in 2020. A 4% - 5% base rate is actually perfectly normal. 

08 May 25	4.25
06 Feb 25	4.50
07 Nov 24	4.75
01 Aug 24	5.00
03 Aug 23	5.25
22 Jun 23	5.00
11 May 23	4.50
23 Mar 23	4.25
02 Feb 23	4.00
15 Dec 22	3.50
03 Nov 22	3.00
22 Sep 22	2.25
04 Aug 22	1.75
16 Jun 22	1.25
05 May 22	1.00
17 Mar 22	0.75
03 Feb 22	0.50
16 Dec 21	0.25
19 Mar 20	0.10
11 Mar 20	0.25
02 Aug 18	0.75
02 Nov 17	0.50
04 Aug 16	0.25
05 Mar 09	0.50
05 Feb 09	1.00
08 Jan 09	1.50
04 Dec 08	2.00
06 Nov 08	3.00
08 Oct 08	4.50
10 Apr 08	5.00
07 Feb 08	5.25
06 Dec 07	5.50
05 Jul 07	5.75
10 May 07	5.50
11 Jan 07	5.25
09 Nov 06	5.00
03 Aug 06	4.75
04 Aug 05	4.50
05 Aug 04	4.75
10 Jun 04	4.50
06 May 04	4.25
05 Feb 04	4.00
06 Nov 03	3.75
10 Jul 03	3.50
06 Feb 03	3.75
08 Nov 01	4.00
04 Oct 01	4.50
18 Sep 01	4.75
02 Aug 01	5.00
10 May 01	5.25
05 Apr 01	5.50
08 Feb 01	5.75
10 Feb 00	6.00
13 Jan 00	5.75

RelievedSheff

I don't personally think there will be much change in mortgage rates from where they are now barring any major economic mishaps.

We are due to remortgage next June and fully expect to be paying around 4%.Certainly don't expect any major movement from where rates are at the moment.

B0bbyEwing

Well I can't do anything (penalty free) until just shy of 3 weeks time anyway. 

Off what you've said I maybe shouldn't instantly discount the 10yr deal. Would take us to 10yrs remaining too. 

But the 5yr deal looks like what I'd maybe go for. 

RelievedSheff

B0bbyEwing said:

Well I can't do anything (penalty free) until just shy of 3 weeks time anyway. 

Off what you've said I maybe shouldn't instantly discount the 10yr deal. Would take us to 10yrs remaining too. 

But the 5yr deal looks like what I'd maybe go for. 

The 5 year deal is the obvious choice.

We will only have 5 years left when we remortgage next year so will be taking a 5 year fix whatever happens.

kev2009

Just had a message about my mortgage today, I'm considering a 2 year tracker as I personally expect interest rates to gradually drop over next year or so and if the worst happens and they suddenly announce they are put the rates up, I believe I can switch to a fixed rate deal as I have no limit on overpayments and no early repayment charge.  I need to confirm that with my provider which I'll have to do the weekend as they are closed by the time I get home.  I have previously done 5yr fixed deals but now rates have gone up and I'd like to OP more than the 10% limit on some years, I think the 2 year tracker is looking appealing to me.  The variable would of been a option but the interest rate is way too high on that.

Kev