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?

Following.

@bubblesbubbles11 I'd say around 5%. Depends on LTV as well.

I don’t think anyone can give you a predication on what rates will do but you can use the calculators online to work out a range of figures and see what you’d be most comfortable with.

eg 120k over 10 years at 5% would be 1273 a month and you’d pay £152,760 in total. You’d be weighing that up against some hypotheticals.

eg you go for 5 years at 5.3% with monthly payments at 1290. At the end of 5 years you’d have 67,886 debt remaining and would have paid in total 77,400. Now let’s say interest rates drop and you get your last 5 years at 3%.You’re monthly payments would reduce to £1220 per month but and your have paid a total of 73,200. In total you’d have paid £150,600 plus any extra fees for remortgaging at the 5 year point which could easily be £1.5k.

With the sums above, the premium for certainty probably wouldn’t actually be that much with the current products available.

@bubblesbubbles11 having remortgaged earlier this year, I just want to highlight that although Santander won’t give you rates until 4 months ahead, other companies will. We used London & Country Mortgages and they were able to give me figures six months ahead. We secured a rate with Halifax in September last year for a remortgage in March of this year. There wasn’t any incentive to stay with Santander once they did release rates, so we switched providers. Hope this helps a bit. Good luck!

Thanks autumnboy this is a really useful tip.

This is a really bad time to lock into a 10 year Fix while rates are so high.

It is likely that the Bank of England base rate will rise again in August from 5% to 5.25%. It will have a few more small rises between August to February 2024 when it is expected to peak at between 5.8%-6%.

But from about March 2024 interest rates are expected to start falling, very slowly and gradually. By the end of 2024 they could be around 4%. This is not certain of course, but it is widely forecast that rates will be falling by the second half of 2024 so I wouldn't lock into a long Fix right now.

I would say probably about 0.5% higher than they are now.

Have you seen this calculator? app.nous.co/refix

It calculates if it's worth you paying an ERC and remortgaging. It won't say it's worth it for you because your ERC is extortionate, but it uses industry predictions so might be useful to play about with

It says the market view is that rates will continue to go up and won't go below 4.5% before 2027.

To emphasise you mean Base Rate so mortgage rates will be a little higher

Does your current lender have 10 years fixes? You can secure one of those end of sept I think (6 months till the end of your current deal)

Yes I mean base rate and I do use the term base rate in my second sentence.

If the base rate is going to fall in 2024, than so will mortgage interest rates.

Yes, I secured 2 weeks ago with Virgin Money and my rate doesn't end until 31st December. I have until 14th January to take up the offer which I now see as my worst case scenario.

One thing is certain. Mortgage rates will NOT fall anywhere near as quickly as they have risen.

I know you did. I was just emphasising it because some people confuse the two

Fair enough

2019 was pre-covid, pre-Ukraine and Brexit hadn’t actually happened. It was a totally different financial world.

Equally however you could have ignored them and got a 10 year fix.

Thing is the other factor for the OP is her mortgage is nearly paid up. The interest rate for the first 3-4 years is going to have a much bigger overall effect than the last 3-4.

In her circumstances certainty might be better for the peace of mind. And a remortgage fee will need to be considered as well. That flat cost becomes less worthwhile the lower the mortgage balance.

Thanks Bunnycat101, your posts have helped me think about this. Grateful to you.

@bubblesbubbles11 I work in a mortgage brokers (whole of market) the recommendation is currently to start looking 6 months before your rate is up and then let the mortgage adviser keep an eye on the market for your specific circumstances.

From the emails I keep getting copied into it appears rates are looking to drop next year towards the end (mortgage).

Thanks Toooldtoworry · Today 14:39 this is really useful, I am doing this totally on my own so incredibly helpful to have this more expert advice. Thank you

Even us working in the industry are unsure what to do for the best. My rate is due up March 2025 so I don't need to look at it until next year but we want to do a 10 year fixed rate if its not horrendous because I want to pay the mortgage off in that time and like the idea of being able to pay the 10% tolerance during that time to repay it in full.

If your 5 year fixed rate mortgage was up for renewal on 1 March 2024 in light of the current drop in inflation when would you wait to seek new deals?

As late as possible or maybe transfer to a tracker rate for a while as long as there is no penalty to leave it.

The fact that inflation fell further than expected from 4.6% to 3.9% makes it more likely that the BoE base rate will begin to fall from May 24.

Many economists are predicting four small cuts in 2024 taking the BoE base rate to 4.25% by the end of 2024.

thank you Twiglets1 · Today 16:06

this is incredibly helpful. Very grateful for your reply.

I would wait as long as possible. The MPC will announce its next decision on interest rates on Thursday 1 February 2024. Whilst it might not necessarily be going down at that point, like @Twiglets1 says inflation is likely to continue its download trajectory and this is already having an effect on swap rates and therefore mortgage rates. A tracker would be ideal if you can find one you can quickly move out of. It definitely feels like brighter mortgage days are ahead.

The MPC will announce its next decision on interest rates on Thursday 1 February 2024.