Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search

Results: Which mortgage rate should I go for?

2.10% - 2 year fixed

8.33% • 2 votes

2.39% - 5 year fixed

75.00% • 18 votes

Neither

16.67% • 4 votes

You may not vote on this poll

24 votes in total.

  • FIRST POST
    • danyalaziz
    • By danyalaziz 10th Aug 18, 12:17 PM
    • 29Posts
    • 2Thanks
    danyalaziz
    Mortgage rate decisions
    • #1
    • 10th Aug 18, 12:17 PM
    Mortgage rate decisions 10th Aug 18 at 12:17 PM
    Hi,

    What's the opinion here for a fee free mortgage, in the current economic climate? Poll above.

    2.10% 2 year fixed or the 2.39% 5 year fixed? Or neither, as I could do much better?

    All suggestions welcome.

    Dan
Page 1
    • madvicker
    • By madvicker 10th Aug 18, 12:31 PM
    • 119 Posts
    • 78 Thanks
    madvicker
    • #2
    • 10th Aug 18, 12:31 PM
    • #2
    • 10th Aug 18, 12:31 PM
    I would go for the 5 year fix, but that is my personal preference.
    For you, it depends:

    - Interest rates are likely to go up in the next 5 years, but not substantially - its a risk you need to take. Low rate now for a short term with the possibility of rate rises in the future, or a slightly higher rate for a longer term with the possibility that rates don't move.
    - How long are you going to live at the property? Can you port the mortgage if you move within the fixed period?
    - It's impossible to see if you can get a better rate without knowing your deposit, income, employment status, credit history etc.
    • danyalaziz
    • By danyalaziz 10th Aug 18, 12:49 PM
    • 29 Posts
    • 2 Thanks
    danyalaziz
    • #3
    • 10th Aug 18, 12:49 PM
    • #3
    • 10th Aug 18, 12:49 PM
    It is a risk but I think stability would be better in my situation. Who knows, these rates may have risen just so they can go back to emergency rates when we get a no deal Brexit!

    It will probably be home for the next 10-15 years so no real concern there.
    • getmore4less
    • By getmore4less 10th Aug 18, 12:49 PM
    • 32,657 Posts
    • 19,649 Thanks
    getmore4less
    • #4
    • 10th Aug 18, 12:49 PM
    • #4
    • 10th Aug 18, 12:49 PM
    Not enough information.

    Start by adding the LTV, amount borrowed, full term, rate for fee based products, the amount you can/want to pay every month.
    • danyalaziz
    • By danyalaziz 10th Aug 18, 1:14 PM
    • 29 Posts
    • 2 Thanks
    danyalaziz
    • #5
    • 10th Aug 18, 1:14 PM
    • #5
    • 10th Aug 18, 1:14 PM
    Shared ownership property, new build, 85% LTV, 22 years, no fee mortgage, 223,500 loan amount.
    • Smellyonion
    • By Smellyonion 10th Aug 18, 1:14 PM
    • 95 Posts
    • 56 Thanks
    Smellyonion
    • #6
    • 10th Aug 18, 1:14 PM
    • #6
    • 10th Aug 18, 1:14 PM
    With all the uncertainty with brexit, I would fix for as long as possible.


    Interest are very low still and there is only one direction they can go.


    Inflation is likely to increase as production reduces in the UK following brexit. A rise in inflation will always be linked to a rise interest rates. Look at the 1980s, where mortgages cost 15% to stop people spending.
    • SG27
    • By SG27 10th Aug 18, 7:22 PM
    • 2,357 Posts
    • 1,600 Thanks
    SG27
    • #7
    • 10th Aug 18, 7:22 PM
    • #7
    • 10th Aug 18, 7:22 PM
    With all the uncertainty with brexit, I would fix for as long as possible.


    Interest are very low still and there is only one direction they can go.


    Inflation is likely to increase as production reduces in the UK following brexit. A rise in inflation will always be linked to a rise interest rates. Look at the 1980s, where mortgages cost 15% to stop people spending.
    Originally posted by Smellyonion
    But if production is dropping then so is the economy meaning people have less money to spend so inflation falls. I would argue that the uncertainty from brexit will keep a lid on economic growth. Meaning inflation and rates stay low.

    But I would still go for the 5 year fix. Im risk adverse and no one really knows what the future holds.

    The reason rates have been raised is because wage rises are creeping up meaning a potential risk of wage price spiral.
    Last edited by SG27; 10-08-2018 at 7:24 PM.
    • Smellyonion
    • By Smellyonion 10th Aug 18, 8:57 PM
    • 95 Posts
    • 56 Thanks
    Smellyonion
    • #8
    • 10th Aug 18, 8:57 PM
    • #8
    • 10th Aug 18, 8:57 PM
    Thts the thing, the economy is unlikely to shrink people won't leave in droves. Itll stay static which is just as bad when production reduces. When production reduces say strawberries, for example, because European workers are capped. this reduces supply causing greater demand for goods. So your 2 strawberries become 3.

    Or imports restricted, causing a finite supply, supply decreases, demand increases, inflation spirals.

    I guess you might be referring to the size of the economy itself (gdp). Which is true, if the size shrinks, demand shrinks as the supply shrinks
    Last edited by Smellyonion; 10-08-2018 at 9:02 PM.
    • madvicker
    • By madvicker 10th Aug 18, 11:37 PM
    • 119 Posts
    • 78 Thanks
    madvicker
    • #9
    • 10th Aug 18, 11:37 PM
    • #9
    • 10th Aug 18, 11:37 PM
    Thts the thing, the economy is unlikely to shrink people won't leave in droves. Itll stay static which is just as bad when production reduces. When production reduces say strawberries, for example, because European workers are capped. this reduces supply causing greater demand for goods. So your 2 strawberries become 3.

    Or imports restricted, causing a finite supply, supply decreases, demand increases, inflation spirals.

    I guess you might be referring to the size of the economy itself (gdp). Which is true, if the size shrinks, demand shrinks as the supply shrinks
    Originally posted by Smellyonion
    Umm, I think you have your basic economics wrong. Demand doesn't increase because there has been a supply shock. Demand stays at the same level, particularly if as you say people don't leave. But there are fewer goods, and so the equilibrium price is higher.
    • Yawn
    • By Yawn 11th Aug 18, 12:49 AM
    • 101 Posts
    • 24 Thanks
    Yawn
    I just remortgaged with a three year fix. If forced to choose between two and five, I'd always go for five, but don't overlook any early repayment charges. Five years is a long time in the future. What if your circumstances change?
    • getmore4less
    • By getmore4less 11th Aug 18, 3:20 AM
    • 32,657 Posts
    • 19,649 Thanks
    getmore4less
    On a loan amount of 223,500 over 5 years often fee based product are cheaper.

    Which lender is offering those rate on HTB @ 85% LTV.
    What other rates do they offer with fees?
    • danyalaziz
    • By danyalaziz 11th Aug 18, 12:04 PM
    • 29 Posts
    • 2 Thanks
    danyalaziz
    Hi,

    This is with Barclays. 1.78%, 2 year fixed, 999 upfront is the other product they offer.
    • danyalaziz
    • By danyalaziz 11th Aug 18, 1:55 PM
    • 29 Posts
    • 2 Thanks
    danyalaziz
    Does anybody have other suggestions as to what mortgages out there are better?

    Shared ownership - new build flat
    Full price: 350,000
    Our 75% share price: 262,500
    Loan required: 223,125
    LTV: 85%
    Loan term: 22 years

    A 5 year fix would be preferable. Whatever works out cheapest.

    Thanks
    • getmore4less
    • By getmore4less 11th Aug 18, 8:50 PM
    • 32,657 Posts
    • 19,649 Thanks
    getmore4less
    223,125 22y 2y fix

    2.10% no fee or 1.78% 999 fee

    1056pm

    the lower rate saves money over 2 years around 370.
    • synavm
    • By synavm 11th Aug 18, 9:52 PM
    • 13 Posts
    • 1 Thanks
    synavm
    I am at a loss with this myself.

    We are hoping to purchase a 370,000 property using the HTB scheme. Circa 58% LTV for a mortgage in the region of 212,000.

    We are stuck between a Halifax five-year fix at 2.2% through L&C or TSB two year fix at 1.68% direct.

    To throw a spanner in the works, we have been turned down by Nationwide and NatWest at underwriter stage for overdraft usage (all authorised but living in it. We are paying it off on completion once my Father completes on his sale and gifts us our deposit, funds to clear debts).

    Any advice would be really well received.
    Last edited by synavm; 11-08-2018 at 9:55 PM.
    • getmore4less
    • By getmore4less 12th Aug 18, 6:22 AM
    • 32,657 Posts
    • 19,649 Thanks
    getmore4less
    For the 5y fix

    From Barclays 3 Aug sheet.

    2.24% 999 fee you would be 500 better off after 5y over the no fee at 2.39%

    In both cases you discounted the fee based option why?
    • jonnygee2
    • By jonnygee2 14th Aug 18, 12:01 PM
    • 153 Posts
    • 115 Thanks
    jonnygee2
    A 5 year fix would be preferable. Whatever works out cheapest.
    Well, impossible to know without a crystal ball.

    So, just think about the risks. With the two year fix, what's the rate? Then imagine the interest rates go up 1.5% in between now and then (probably about worse case), what will the repayments be? Will they be ruinous or affordable (albeit more expensive) to you?

    By fixing for a shorter period, you are essentially accepting a bit more risk of paying more later but for the potential gain of paying less overall. Five year fix, less risk, less potential gain.

    I fixed for five years recently. I was happier just to have the stability / less stress. I know I can afford it, I'm happy with it, and it doesn't seem worth the extra effort and risk for a small potential gain.
    • swindiff
    • By swindiff 14th Aug 18, 12:22 PM
    • 340 Posts
    • 135 Thanks
    swindiff
    I have just fixed my mortgage with Santander, it was a retention deal so no affordability checks or fee's. The options were 2 year fix at 1.99% or 5 years at 2.29%. The difference was 17 per month, for that small amount I considered it was worth the peace of mind so fixed for 5 years.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,474Posts Today

8,517Users online

Martin's Twitter
  • Ta ta... for now. This August, as I try and do every few yrs, I'm lucky enough to be taking a sabbatical. No work,? https://t.co/Xx4R3eLhFG

  • RT @lethalbrignull: @MartinSLewis I've been sitting here for a good while trying to decide my answer to this, feeling grateful for living i?

  • Early days but currently it's exactly 50 50 in liberality v democracy, with younger people more liberal, older more? https://t.co/YwJr4izuIj

  • Follow Martin