Picking a fixed rate mortgage

[upstairsdownstairs]

Seems like a silly question but...does it matter what the standard variable rate of the lender is when picking a fixed rate mortgage? We are looking to fix for 2 or 3 years. The lender we are currently looking at would offer us 2.79% reverting to SVR after 2 years, which is currently 3.99%.

However, there are other lenders out there with eg. 2.34% fixed rate for 2 years, with a current SVR of 4.99%.

The SVR is obviously going to change, but should I assume that lender 1's SVR will be still be lower than lender 2's after 2 years?

I'm on SVR and am on 2.5% though that was after coming off a fixed rate deal. Things may be different now, having just looked at my lenders website, they no longer offer SVR, instead they call it Homeowner Variable Rate (HVR).

So I think you need to confirm with the lender if the SVR is really being offered, or if it is actually something else, something like an HVR.

I think the difference between SVR and HVR is that the SVR was guaranteed to be 2% about base rate. Maybe that was only certain lenders (like mine). Whereas the HVR is a rate the bank can set as it likes.

We are looking to fix for 2 or 3 years.
Would you not look to fix for longer if possible? Rates are low now, they will go up eventually, matter of when. Would you take a gamble on say a 5 year fix?

The lender we are currently looking at would offer us 2.79% reverting to SVR after 2 years, which is currently 3.99%.

At which point you may be offered another fixed rate, though that may involve paying fees.

I suppose it depends how easy you feel it will be to get on to another fixed rate at the end of the initial fixed rate.

should I assume that lender 1's SVR will be still be lower than lender 2's after 2 years?

I don't think you should assume anything. Rates may stay the same for several years, or they may go up. Can't see them going down.

You have mentioned nothing about Product Fees. Those could be £1000+ and you would get that each time you apply for a mortgage, so initially and then at the end of the fix if you go for another fixed rate.

Not sure if TalkInPeaces' spreadsheet will be of help or not, it is for Interest Only mortgage calculation:
docs.google.com/spreadsheet/ccc?key=0AiZqlQ7-gn07dDN4clg5OXhLMGJWbHZhOEo4UTJINEE#gid=0

I'm considering 5 year fixes too, but 2-3 years might work better for our situation.

I realise that interest rates are probably going to go up. But in case we are not in a position to take out another fixed rate in 2-3 years time, I am just wondering if I can predict which lender will have the lower SVR at that point.

Yes, I am considering product fees too. Just wondering whether I need to consider SVRs at all, or if there is nothing I can predict about the SVR of one lender versus another in 2 years time.