Fix Now or Not?

LizLeonard

I am sure this is the question on a lot of people's minds as those cheap fixed rates end.
Mine is a 3.79% with Nationwide expiring 30th June.

Looking at the Bank of England minutes from their meeting last month and commentary, there appears a strong possibility of base rate coming down in July/August.

Also there is the possibility that the ECB will drop rates next month (although they are denying this).

So what is the view out there? fix now for another couple of years or wait for up to two months or maybe go for a tracker?

davepugh1981

How comfortable is your mortgage payment? Could you afford to pay a traker rate if it increased four times in as many months? What are the best rates in the markets for trackers and fixeds?

It all depends on your circumstances, my 3.69% from nationwide is also coming up at the end of the year, 'm probably going to fix again but at 4.69% this time!

carnet

Personally, I would wait.

Even if I had to pay Nationwide's SVR for a few months, surely the saving to be made by taking out a fixed rate at a (likely) lower rate over, say, 2/3 years, if and when rates come down (as there is now every indication they will do ), will vastly outweigh the cost.

lisyloo

If you need the peace of mind of a fixed rate and that makes you comfortable then you should do that.

If your outgoings are comfortable then in my view a variable rate is best in this situation.

I do not think it's advisable to go on SVR waiting for rates, if your mortgage is large. I don't think that makes sense.
But it all comes down to the size of your mortgage.
If it's £25K then it doesn't make much odds.
If it's £350K then it's cost a fortune on an expensive SVR.

LizLeonard

Some diverse opinions. My mortgage is £100k & I have been repaying it by £100 a month for the last year to make sure I could afford a more expensive rate.

Now reflecting on what has been said, my take on it is as follows:- Assuming I stay with Nationwide their SVR is 5.99%, 1.5% higher than their fixed, so even if rates dropped by .5% (which I doubt in the short term), if I stayed on SVR for two months - it would take me 6 months just to breakeven. If they drop by .25% then 12 months.

So I guess that if I want the comfort of fixing do it now or if I want to gamble on rates dropping then go for a two year tracker.

Does that make sense?

lisyloo

Just to add, I personally don't think the outlook on interest rates is clear at all and I think July/August is an early prediction.

The reasons - well the price of oil which may cause inflationary pressure.
There are reports that gas prices may go up 15%.

I think expectations of rate cuts so early are premature and that there is a certain risk with that expectation.

Because it's so difficult to predict rates then I always suggest going for what suits your circumstances and what you feel comfortable with.

If you are stretched and want peace of mind then go fixed.

One way to put it is what would you hate most

1) Rates fall and your stuck on a fix
2) Rates rise and you are on a variable

If you hate 1 most then go variable
If you hate 2 most then go fixed.

Xbigman

If you are talking about fixed rate deals then most lenders have already priced in a cut. So now is as good a time as any.
Regards




X

Froggitt

Ive just fixed with the Yorkshire, despite their additional charges for existing customers, at 4.69% for five years. Yes the rates will probably go lower, but they will probably go back up again at some point also......2007/8 I read this morning.