Mortgage...how long to fix.

[Clairejay34]

Our fixed rate mortgage is due to end in Jan 2023 - we currently pay £660 per month. We had a meeting with a mortgage advisor today, the best he could get us with the new rates was £950 per month for 5 years fixed rate (5% interst roughly) or £850 for 10 years fixed rate (4% interest).
He advised to go for the 10 year one, we have 2 young dds aged 4 and 1 and he said the stability would outweigh the risks which I do understand.
But what if it interest rates drop again after 5 years and we are spending alot more than we need to be and it costs around 10k to leave the fixed rate.
What would you do? Any advice or maybe some points we haven't considered?
Thanks.

I won’t fix for 10 yrs unless it was a very good rate.

Ask about the early repayment charges on each, but if you can get something affordable and don’t expect to move then the certainty may be good.

So the energy bill crisis was going to be catastrophic and the government finally stepped in. Bills going up thousand’s of pounds per year.
Does the bank of England realise that raising interest rates will be just as a damaging? It will affect mortgage customers and renters, including people on UC.
What will we all do? We haven’t all got an extra £300 per month to pay? Does the Bank of England know lots of people won’t be able to make these payments?

How long is best to fix for? Do you think they’ll freeze interest rates or atleast slow it down a bit?

Lenders have put their rates up way above BoE base rate, they are price gouging. Half of me wonders if they’ve done it because they expect rates to either not go that high or they expect them to come down again fairly quickly, raking in all that lovely extra interest. It’s telling that 5/10 year fixes are lower than 2 year ones.

I would do 5yr…… 10 yr is too long. Like others have said anything could happen - you might need to sell up before the 10 years for a myriad of reasons.

Did they give an option for a 3 year fix @Clairejay34? Just wondering what the difference between that and the 5 year one is…..

Personally, I would never fix for 10 years unless it was a low rate, but I can see that some people may find stability in doing that, especially if you would be crippled if the rates went higher.

My fixed period expires at the end of this year too, and I have just locked in a rate with my lender, wish I'd done it sooner as I didn't realise you could do it quite early on.

4% is a great rate for what's currently out there, however, I imagine in 5 years time, it would have dropped drastically.

The general feeling on here is the current rate or maybe slightly higher is the peak then it will come down again in a few years?

I can’t see a return of interest rates been above 7%, property prices are too high and it would kill off first time buyers and people moving upwards.

The market would die wouldn’t it?

We’ve just fixed for 5 years at 4.45%. Not a great rate considering what interest rates have been, but gives us the security while the children are young.
By the time we have to remortgage we’ll have paid another chunk off, and our childcare bill will be near zero as our youngest will be in Yr6.

Who did you go with ?

@TuxedoJunction they offered a 2 year one but it was about £1100 a month, which is just unaffordable for us at the moment unfortunately.

@Dave20 tsb had the best rates for us.

We have decided to apply for the 10 year one at the moment, it doesn't actually come in to affect until February so we can cancel without charge up until a couple of weeks before. We will keep looking in the meantime, but wanted to apply now incase rates shoot up even more.

It's such a stressful time for many. The difference in price, along with gas and electric etc is just crippling. Really regret not fixing for longer 3 years ago.

Interest rates were by and large between 4 and 6% from 1993 to 2008. They've been unnaturally low since the financial crash in 2008. We bought in 2000 so always had rates like 5% or 6% until 2008. Think I'd go for the 10 year fix, based now on my experience of that. I sadly suspect in 5 years time rates will not be back to what we've enjoyed for the last 14 years . Unless the trend is bucked these cycles tend to be approx 15 years long.

So do I fix now or wait for new year ? Rates might settle again in the next few weeks maybe ?

The next BOE rate review is 3 November….. Predictions are it’ll go up another 0.5%…..
Rates might not settle for a while yet.

Isnt it a bit reckless to raise interest rates like this though by the BOE? Surely they know many people won’t be able to afford these rates , people particularly who have to remortgage? It was known that people couldn’t afford the increased energy bills so why do the BOE or government think that people will afford higher interest rates?
They are shooting up too quickly.

The BoE haven't actually put rates up that fast - mortgages have increased more rapidly than previously anticipated because banks are responding to the mini budget fiasco.

But didn’t the government u- turn on that disastrous mini budget?
The BoE have raised interest rates a few times recently and are doing it again in November. Some peoples mortgage payments will double.
No one seems too concerned with this like they did with energy. Is it because they know most mortgage payers aren’t on UC or pensioners so think we can just suck it up?

@Dave20 you could fix now and get a deal in place to begin when your current fixed rate ends, you can cancel it before it actually begins if things do change. That's what we have done. Didn't want to risk waiting any longer incase the rates rise more. Its absoluty rubbish but its totally outwith our control unfortunately, and it's a guessing game about what will happen.

Not with Halifax. I'm with them, my rate ends 31st Jan 23. My house move has just fallen through so I've given up on that idea after almost 10 months of stress. My broker was going to do a new deal with Halifax for me in my current mortgage, but you can only do it 3 months before unless you want to pay the early repayment fee of course.
BoE next meeting is 3rd Nov. I'll be applying on 31st Oct. I've set a reminder in my phone and am praying for the deals not to be pulled.
I can't decide whether to go for the 2 year or not as expensive 5 year. We've outgrown the house though and want to move. We are going to see what the market and the rates do now though before moving so I don't want to fix too long, but equally I don't want further rate rises. Feels an impossible decision really.

Thismustbemydream-Mine ends 31st January too. Halifax say I have to wait until the 1st November before I can change. That’s two days before the BoE set the new rate.

Yes it’s impossible. Does anyone think the Band of Englands rate will remain the same or even go down on 3rd November?

No I think it will definitely go up.

Forecasters are saying there probably shan’t be a dip in rates until 2024….. Hence why the 2 year fixes are so high, and the 5 year less so.

Yes this is what I’ve found, we fixed for 5 years in August and the rate was lower than the 2 year fixes offered.