2 or 5 year fix on mortgage?

[confusedlots]

Sorry for another mortgage question! I know there is so much uncertainty and no one can really tell what the situation will be in a couple of years time, but what are people generally doing who are renewing their mortgages at the moment?

It worries me to fix for 5 years at a rate of 6%, I guess I'm hopeful that things will settle down in a few years. But also am I likely to be kicking myself when I go to renew again in 2 years time if rates are climbing even higher?

What are others generally doing?

Following as s

Following as same situation

If the 5 yr is affordable/comfortable for you, I'd probably do that. I'd rather be paying a bit too much, but be able to know I can afford to live and budget for the next 5 years, than risk it, in the hope the rates may be lower in 2 years, as they well could be even higher then.

I can fix at 5 years for 5.14%

I just don't know what to do. I'm honestly shitting it and need someone to tell me what to do 🙈

I’m going for a tracker. I can change it to a fixed rate at anytime without penalty (or remortgage to another lender), and the rate is half the 2 year fixed rate, so the BOE rate has to increase a lot for it to reach the same level as the fixed rate. It could well do that, but at least I’ll have the lower rate for a year.

5 years seems like such a long time. When I look back, my life was completely different 5 years ago, and 5 years before that, and so on. Therefore, I don’t want to be looked in for so long especially when the 5 year fixed rate is over 6%.

It’s difficult to know what to do but I feel pretty confident in my decision, with what I know at this point.

The rates only feel obvious in hindsight.

I would do what is best for you.

Personally if you can pay the rates for 5 years I would say go for it.

No one can tell what will happen in the future, but this gives you stability. You might lose out or you might end up thinking it was the best decision you made.

I've just secured a mortgage on a new property - I've fixed for 5 years on the advice of my mortgage advisor. His thoughts were that in 2 years interest rates will be much higher than they are now.

We did 5 years about a month ago but it was 3.? percent. Luckily we fixed before it got worse. Mortgage is up by £120 a month so it’s frustrating but we weren’t sure 2 years would cut it so decided to risk it.

Watching with interest (haha) as we're in the same dilemma. Unfortunately I don't think there's an actual answer to this, it's all a bit of a gamble.

We were on a fixed rated until May 2023 at 1.94% we spoke to our mortgage advisor and chose to pay an early repayment charge of about £700 (which we really could have done without) to enable us to secure a 5 year fix at 3.92%. Part of me is glad we acted when we did (the rate was pulled the very next day) but part of me wonders if we should have just waited it out until next year.
There are no easy answers. It all boils down to personal circumstances. We are not gamblers and wanted the security of knowing what our monthly payments will be for the next 5 years- yes it is costing us more per month but it's within our affordability right now.
Alternatively if you decide to wait it out but find that rates increase further, lengthening your mortgage term may be an option to reduce monthly payments. And of course if you are in the position to over pay, reducing your capital as much as you can will help lessen the impact of higher rates.
Definitely seek advice from a mortgage advisor for your own circumstances, many offer free advice.

I also just went with 5 years fixed at 4.1% on a new property using HTB. Feel very sorry for first time buyers who are yet to apply for their mortgages

It's certainly not comfortable for us to be paying the monthly repayments of a 5 year fixed deal, but it's within our means as long as we are very careful with money, I imagine holidays will be the first thing to cut back on (and we certainly don't have extravagant holidays at the moment).

I was having a look back at how high interest rates have been in the past. They were in double digits for most of the 80's and peaked at around 18%. We would never be able to manage repayments if it got that bad again.

I dont want to speculate because really no one knows. And I dont want people to make the wrong decisions because they listened to my advice. And obviously this is not financial advice...

But with the way the government is. I wouldn't be surprised if rates increased further significantly.

Everyone keeps saying the expected changes in interest rates are proces in. And the reason why the 5 year fixed are sometimes lower than the 2 year fix is because people think in 2 years the rates will fall.

I think that's all bullocks. Especially with the news right now.

UK is up shit creak right now. And I wouldn't be surprised if rates increased significantly.

Even when people were fixing for 3- 4% people were wondering if they had done the right thing, especially with the rate rises in the last few months. Now they are thanking their lucky stars they locked in a rate of 3-4% for 5 years.

Even now you could be doing the same if rates rise further. Thanking your lucky stars you locked in your current offer. Obviously rates could fall but right now I dont think they will, not for a few years.

Is it worth hedging your bets and going for a 3 year fixed, if available? That's what we've secured, as 2 years seemed too short and 5 years was too long.

I think they will rise in 2yrs so I would fix for 5yrs

saying that

if they did stop you could buy yourself out and remortgage

I did thst years ago. Added the extra cost onto mortgage but the savings we made a month was more than the £1500 we paid to escape iyswim

I played safe. I like to know what I’m paying for a set length of time

Is 6% the best deal you can get looking at the whole market, or is it just what your current lender is offering?

It's so hard to know what to do with everything the way it is. If you literally couldn't afford anything higher than 6% then for me the risk of possibly paying above odds outweighs the risk of not being able to meet your mortgage payments in 5 years time....

How much would it cost you to get out of the mortgage if rates went down? Do you expect any change in your financial circumstances over the next few years? Any kids starting/stopping childcare, promotions etc?

Watching with interest (so to speak)
we’ve been offered 5.39 for 2 or 5 years. It’s an extra £170. We can just afford as dh got a small promotion. But it feels a big commitment for 5 years if things do improve… just don’t know what to do. This sort of thing is not in my skill set!!

I use the Capital Economics interest rate forecasts (for work purposes) and they're a good indication of base rate movements. Think the latest is a base rate of 5% by Q1 2023 (more than double the current base rate of 2.25%).

Add on a margin for the mortgage interest rate and you'll get some idea of how rates are likely to move over the next couple of years.