Fixed rate mortgage deals

[bubblesbubbles11]

I have a fixed rate mortgage on a good interest rate which fixed term comes to an end in just over one year. Moving my mortgage would involve exit fees of about £7K.
I did look into a deal on a 10 year fixed rate about six months ago but decided against it because of the exit fee.
Now I am wondering again whether I should move my mortgage now to a good 10 year fixed rate and suck up the £7K exit penalty in order to be assured of peace of mind as per Martin Lewis money saving expert quote below in the last week:
"You might even want to pay a booking fee to lock in a cheap mortgage in case things get more expensive and if it doesn't you can get a cheaper one elsewhere, so it's like an insurance policy so you lose a few hundred quid having locked in a cheap mortgage."

Has anyone else done this or thought about it? Do you think this is sensible to do now or should I just wait till the end of my current fixed rate and remortgage then and save the 7K?

In your case I would probably stick with the mortgage because of the high exit fee. @WonderWoop made a great case for why you should not switch.
Also where are these 7k going to come from? If you increase your mortgage because of that you'll end up paying extra interest!
All financial predictions point to an BoE interest rate of around 2% by the end of the year when you should be able to secure a remortgage. I think given your mortgage is not huge and you will only have 13 years left, even if your next fix is 3 -3.5%, you will end up paying less.
But as always do the calculations and if you have 7k lying around throw it at the mortgage now!

WonderWoop · 29/05/2022 10:45
thank you so much for your post i am so grateful to you

Thank you so much for all of the posts. This has helped me think about this so much. Being a single mum i want to secure our house, your posts have helped me. x

@bubblesbubbles11 no problem at all. If you have more specific rate details I am happy to do some more calcs for you.

Even though I don’t think it’s worth moving rate, it’s not wrong to pay more if you value security really significantly. You actually have a very good dilemma here. I’m sure it will work out.

Hope you managed to get a reasonable remortgage @bubblesbubbles11 ? Things have really gone horribly wrong with the interest rates 😟

Thnaks Callisto.

Well I did not action this back last year, a horrible mistake maybe in retrospect (although it was the height of Liz Truss's reign of terror so that is my excuse!), so I will be facing this very dilemma with effect from 1 March 2024 and my mortgage provider Santander has confirmed to me in the last week that the earliest I can start looking around to secure in advance will be 1 November 2023.

So any thoughts from anyone very welcomed! Ideally I am looking for a 10 year fixed rate at the lowest rate possible paying off about £120K which is currently looking at around £1450 pcm (although my interest rate under my current about to expire fixed is under 2%)

Any thoughts?

@bubblesbubbles11 why a 10 year fix? You'll get a lower rate with a shorter fix.

@Callisto1 mortgage rates are now at their long term average. The years of virtually 0% rates were an anomaly. We all have to get used to long term higher rates. It's painful. 🙁

Ten years because ten years will clear the whole thing (maybe slightly quicker than 10 I dont know) and I will then never have to face the terrifying Liz Truss type scenario again which seems entirely possible if the Torys continue after the next GE.
Whether they continue or not the rates are going to be high, but I want to avoid the consequences of some nutter coming in down the road and making them incredibly unstable again resulting in panic and wasted hours trying to find out my options and sleepless nights of anxiety due to someone in power have a go like that.

@bubblesbubbles11

obviously you must do what you think best and I understand the worry re another Liz truss & not wanting to do this again, but a 10 year fix, right now, sounds like a mistake to me. Do you really want to paying 7 percent when rates drop to 4%?

plus the ERC if you want to move?

Do not get a 10 year fix, OP. That's completely daft.

10 year fix ATM, 5 years max

10 year fix arm is madness, 5 years max. We got a 3 year fix secured at 3.39 12 months ago ready for 6 months later

Thing is, even ignoring the Liz Truss thing, when I entered into my current 5 year fixed deal starting 2019 with an interest rate of 1.9% my financial adviser (it was at the tail end of the most acrimonious divorce you can imagine and yes it is just me paying the mortgage) also said I would be totally mad to take a 10 year fixed at that time even tho I had said multiple times that that was what I was interested in....

@bubblesbubbles11 speak to a mortgage broker after 2nd September. They will take everything into consideration and give you the correct advice.

I'm an ex mortgage broker (specialise in protection now) and I'm considering a 10 year fixed next because we intend on repaying the mortgage within that time. Everyone's circumstances are different and the right answer is very individual.

We've taken a 10 year fix at 4.74%, agreed at the start of June. I want the certainty for budgeting and peace of mind tbh.

So frustrating that we didn't make this move a year ago when we were first contemplating upsizing as we were looking at less than 2% and a monthly payment of c.850. Now we will be paying 1200 on a mortgage of 224.

I was re-reading the thread and hoping you’d gone for it at the time. You can see a lot of people had strong convictions that put you off doing what you wanted and it shows no-one has a crystal ball.

If a 10 year can be found at a reasonable rate and you’re willing to perhaps overlay in the last few years for certainty it could be a good option as you clear it down. it looks like nationwide are doing a 5.04% 10 year at the moment which could be a reasonable option. You have to run the numbers and work out how you’d feel if last 5 years dropped to say 3% and you were paying they premium versus now you’d feel if there were increased premiums and work out how you’d value certainty.

The banks never lose money so you can be sure with a 10 year fix at 5.04 rates will be 3-4% for at least 5 years during that term.

This is my issue with fixed rate deals in general (leaving aside current timing and rate levels): the longer the fix, the more risk to the bank, and the more margin they're you to build in to make sure the customer's taking the brunt of that. So, all else equal, fixed is typically going to be a worse deal for the borrower.

@mildlydispeptic agree. Fixed gives you certainty for which you pay a premium.

I paid the ERC and took out a ten year fix last November because I was in exactly the same situation as you. But I wouldn't take out a ten year fix at these rates.

The broker that said you were mad to take out a ten year fix when rates were at the lowest they've been in history should be jailed for his incompetence. But it's not the same situation now because rates are high and they can't possibly go higher or the bubble we call our housing market will go bang and the country won't recover for a generation. Houses are too expensive for rates to go much higher. They could go to 6 or even 7% but your financials sound like they could take that.

@PerfectYear321 100% agree

😊

You obviously were not around 2007/8? Of course banks lose money. They also have to borrow. Their long term fixes are based on what they forecast. 10y fixes disappeared for a while because banks were unable to predict that far ahead.
When choosing how long to fix, it is not about ‘winning’, but to make sure you can afford the mortgage in the long term.
Most people who took out a 10y fix 18m-2y ago will be ‘winners’. Even those that took them out 5y ago are likely to be ‘winners’ because rates are not expected to get back to that level any time soon.

@messybutfun fair enough banks haven't been winners with people who took out low fixed rates before the steep rise in interest rates. But that was an unusual situation. Rates don't usually rise that steeply.

Now rates are back at historical norms and will stay at this level for the foreseeable, banks will be winners with people taking out long term fixes. They have to be otherwise they'd go bust.

What are posters best predictions on what kind of mortgages/interest rates will be on offer with effect from 1 March 2024 (and available to be negotiated from 1 November 2023)?
I realise that is more than a few months ahead I just wondered whether anyone has a feel for it especially if you work in this kind of area?