Fixed rate or variable mortgage- wwyd?

[pinkytheshrunkenhead]

Safe me wants to go with a fixed rate but also considering a variable?

What would you do?

It all depends on your circumstances and your attitude to risk. If you don't want any nasty surprises then a fixed rate is the way forward. If you want a cheaper deal and it wouldn't be a train-smash if the interest rate went up 2 or 3% at some stage, then a variable rate might pay off.

The interest rate (swap) curve (which is what the market thinks will happen to interest rates) is still pretty cheap. If you want to check out an example see here: www.swap-rates.com/UKSwap.html (Not a recommendation, just first easy to read link we found on google).

What does this mean? We interest rates are low, but the market in pricing in a move up. This doesn't mean it will. The market was doing this 2 years ago and it still hasn't moved significantly. So you can ride the low rates or take advantage of a fix as per CogitoErgoSometimes' advice. Inflation also eats your debt up (though it hurts in cash flow terms!).

Fixed rates tend to be short term these days as banks don't want to get on the wrong side of the deal (when it costs them money).

Good luck!

We've just fixed for 2 years at 3.79% it was only an extra £15 per month compared to the best variable rate they could offer which I thought was a small price to pay for peace of mind, and £15 per month would soon be eaten up if interest rates started to rise.