Mortgage- fix or tracker?

[JugglingJanuary]

Hi all

I can't find any current threads on this.

Mortgage deal is coming to an end & I need to decide what to do next.

Fixed deal 2/3/5 or base rate tracker only 2yr available with my lender. Lender seems about the same rates as other 'brands' & I don't really want to switch lenders.

I've always fixed as I like to know where I'm at, but I have read a few things saying that tracker is better. Some posters say they been on a tracker for years & always been better off than if they'd fixed.

If I fix should I
2 @ 1.49
3 @ 1.64
5 @ 1.64

Tracker 2yrs is currently @ 1.34 (base rate plus 1.09)

No fee.

I know it's all a bit 'how long is a piece of string' but just interested in opinions.

I personally think interest rates will rise. But I'm a pessimist and don't work in the city.

I've fixed for years and repeatedly lost out but I like knowing my mortgage is affordable and guaranteed to remain so for the duration of my deal.

I forgot to mention, but not sure how relevant it is...

I might need/choose to decide to go overseas where my 'getting older' mum is, with my lender I can switch so I can rent this place out while I'm away. But if I sell & can't port the mortgage I'll have to pay ERP.

If I don't go overseas I'll likely move house, but can port so not too bothered about that scenario.

Head is a mess re whether to go to mums or not. It's complicated, but I have citizenship there.

Happy to answer any other questions, but my question is really what to do because if interest rate being likely to go up but maybe not very much ?!?!

With the latest inflation figures today I'd imagine the BoE will be raising interest rates again next month - and at your figures they don't have to go up by much for the fixed rate to be the winner.

@MauveMavis

Thanks for your reply.

That pretty much sums up how I feel, but somewhat fed up of not ever getting the best deal because fixing seems a better option.

Mine's coming to an end in June (able to fix as early as March) and I am really hoping for rates to remain stable until then - so I can fix for 5 years.

I think the next few years are going to be financially bumpy for us all (price rises etc) and I am will appreciate knowing what my mortgage will be every month.

@McAvennie

No they don't, do they, but I can't find much to say what's expected to happen in 3-5 years...

So they might match for a while, but then what?

I don't want to fix for 3/5 years, for them to really drop in 2 years. But will I get to end of 2/3 year fix and wish I'd fixed for 5??

Crystal balls please!!

@WhosThatBehindTheFlask

Mine's coming to an end in June (able to fix as early as March) and I am really hoping for rates to remain stable until then - so I can fix for 5 years.

I think the next few years are going to be financially bumpy for us all (price rises etc) and I am will appreciate knowing what my mortgage will be every month.

@WhosThatBehindTheFlask

Have you spoken to your lender? Some will allow you to fix a deal now, that starts when your current one ends.

I was very tempted to fix for 5, but it seems like a longtime at a 'not great' rate, wish I'd fixed @1.14 when I could have (hindsight!! Grrr) don't want to make the same mistake!

But at the same time, if I sell to go to mums the early repayment fees will be a bit nasty!!

Yes, March is the earliest I can fix for a mortage that currently ends with them in June.

All fingers crossed the fix deals don't go up too much before then.... :)

I've always fixed.y mortgage is big and I like the certainty. Especially now. Rates are only going one way. I'd fix as long as possible.

@TooManyPJs

Thankfully mine isn't too big, but then neither is the house 🤣

Unfortunately it's bloody expensive around here & a big jump in price between what I have and anything worth moving to 🤦🏻‍♀️

I seem to have attracted all likeminded people so far.. would rather fix & know where we are at!! 😃

The last thread I read they were all 'trackers' which is what made me rethink my options.

Plus the ERC if I go to mum. It'll be expensive. But if I don't fix for 5 years, will I regret it?!?! Arghhh my head hurts

I would fix for 5 years but I'm risk averse.

There have been few (if any) times in history where rates have been this low for this long. Inflation is really pretty high (5%) and the usual way to control inflation is to increase rates.

If rates increased by even 0.5% you'd be better off with a fix.

Personally the logic I do is: I can definitely pay my mortgage at e.g. 1.64, and I would have to make cuts to my saving or spending if rates went up to e.g. 5% or even higher. I would far rather guarantee the 1.64 than take a punt of 0.34% over 5 years - £340 per year per £100k of mortgage Vs a ? Chance of say 5% Vs 1.64% fixed (so 3.36% more) which is 3,360 per 100k of mortgage per year.

[quote JugglingJanuary]@McAvennie

No they don't, do they, but I can't find much to say what's expected to happen in 3-5 years...

So they might match for a while, but then what?

I don't want to fix for 3/5 years, for them to really drop in 2 years. But will I get to end of 2/3 year fix and wish I'd fixed for 5??

Crystal balls please!![/quote]
Rates are still low right now. Over the next 3-5 years I would expect them to rise and then yes, they may drop but realistically they're unlikely to go much lower than those you've been quoted simply because there's not much lower they can go. Energy prices are going up now and again in October, food prices etc are all going up unless you owe millions I would think it best to guarantee the cost of your mortgage right now as the difference between 1.34 and 1.64 can't be much.

I always look at what it really means in my pocket. My mortgage isn’t huge, so I could spend ages getting over a tenner a month. Is a tenner a month worth piece of mind? Yes. (but that’s personal)

I've just paid an ERP to switch mortgage providers and get an offset mortgage. I fixed my rate for 5 years as rates haven't been much lower than they currently are and I can only see them going one way. I'd rather have peace of mind and know I can afford the repayments for the next 5 years than take a gamble.

I would go for a lifetime tracker if that's an option.

If it isn't, then the 2 yr tracker.

I've paid the house off now but I am many thousands of pounds better off because I took the tracker option. It's basically your appetite for risk. You pay for certainty with a fixed rate. When I got the mortgage 10 years ago everyone then was predicting rate rises and yes they did go up but then they went down again and overall I came out massively on top.

My nature is to fix it, but the 'overseas to mum' & resulting ERC is making me think... plus as I said, the thread of 'trackers' saying the same as @CrappyXmasMarket

🤦🏻‍♀️

@CrappyXmasMarket

I would go for a lifetime tracker if that's an option.

If it isn't, then the 2 yr tracker.

I've paid the house off now but I am many thousands of pounds better off because I took the tracker option. It's basically your appetite for risk. You pay for certainty with a fixed rate. When I got the mortgage 10 years ago everyone then was predicting rate rises and yes they did go up but then they went down again and overall I came out massively on top.

Well obviously you came out on top because rates fell off a cliff. They can’t really go any lower so that’s not going to happen to OP !

I fixed in November, rates at almost certain to increase. However if you are expecting to move in the next year I would probably go on a tracker - anything else, fix.

@Mumtofourandnomore. I just don't know. It depends on mums health & my job. Mum wants me to 'go home' as she misses me yadda yadda. & the guilt is getting to me, but I'm not leaving my job until I have to (it'll come to a natural end but no one knows when that'll be! Anywhere from 6 months to 2.5 years).

I would fix as long as possible..inflation wont be going down soon so rates need to rise...years ago i fixed for 8 years at 9%...rates went as high as 16% at one point.....no mortgage now but do folllow the news on all this.

There's virtually limitless money to be made in bond markets for people who know which way interest rates are going.

My guess is they are going up but no-one really knows. I would have said the same five years ago.

If you look at bond yields, the 0.3% difference is roughly the same as between 1 year and 5 year government debt.

I've read that interest rate risk is not really rewarded in financial markets. If you buy a 30 year bond, you can expect a bit more interest than if you rolled 1 years bonds annually but not much.

It's not like you are paying for an insurance policy on interest rates that the company has to make a profit on. You may win or lose from fixing but I think your expected interest is roughly the same. That's why I fix, it doesn't cost too much for the certainty.

Interest rates have remained fairly static the last 10 years. They cannot reduce any lower. Personally I'd fix for 5 years at that rate unless you plan on selling in that time.

Re: porting. The lender gives you the option to port but you go through underwriting at that point and if you/property does not meet criteria they can decline you so factor that in.

FYI I'm a financial advisor specialising in this area and do work with market specialists.

Base rate is 0.25%. Ok, we’ve had lower last year but the downside (up) is huge whereas even if we got negative rates, the bank is not going to pay you to borrow so why would you take a tracker?

it'll come to a natural end but no one knows when that'll be! Anywhere from 6 months to 2.5 years

So we fixed for 5 years and thats what I would have said to you BUT if your job is coming to a natural end within 2.5 years and your then likely to move abroad I'd only fix for 2 years.

@ForensicAccountant

Base rate is 0.25%. Ok, we’ve had lower last year but the downside (up) is huge whereas even if we got negative rates, the bank is not going to pay you to borrow so why would you take a tracker?

Because there's no ERP so if I go to my Mum overseas I won't be stung by that.

@Ilikewinter

it'll come to a natural end but no one knows when that'll be! Anywhere from 6 months to 2.5 years

So we fixed for 5 years and thats what I would have said to you BUT if your job is coming to a natural end within 2.5 years and your then likely to move abroad I'd only fix for 2 years.

Thank you everyone for your posts.

My head is mush, so many things going on...

@Ilikewinter. My current job will come to and end in 6 months to 2.5 years. When it does I'll consider going abroad to my Mum, to be there for her, but I really want to come back & I can only do that if I keep my house here. I used to live there, so I don't know if I'll change my mind about staying there, or not. (It's been a dilemma most of my life).

I'm also considering a local move, but it's expensive around here. I'm in my 50's & my current job will give me the best opportunity for a decent mortgage (to move) but from that POV I can port the mortgage (appreciate @alwayswrighty input, but I don't think it would be an issue. Reasonable salary & wouldn't move to a house they don't consider mortgage worthy).

Someone else said to fix for as long as possible. I can fix for 10 yrs at 2%. Any thoughts??

I need a crystal ball for my life!! Not just the bloody mortgage!!