Mortgage rates

[schnauzerbeard]

Hi all,
Not sure if I should fix my mortgage now for a a 2 year tracker rate of 4.04% (follow on current rate 6.24%) or wait until my current deal ends in June this year and hope for better rates in the next few months. I only pay 1.89% fixed rate right now so 4% is a lot! Don’t know if I should wait, but imagine if interest went up I would be kicking myself for not locking 4% in! I am fortunate enough to have 55% LTV so the 4.04% would be ab extra £75 a month or so. (Remaining loan £70k). The product fee is almost £1000 though.
If your deal ended in June 23 what would you do?
Thanks

A tracker rate won't be fixed at that if the Bof E changes rates. Im not qualified to give advice, so am commentating as a general lay person about general things and nobody knows what will happen over the next two years, but from what I have read wider markets seem to be supporting an expectation that rates will rise more early this year, ( and your tracker rate will go up) before peaking and retuning to around, or maybe even slightly below where they are now. But rates of the past few years aren't expecting to return any time soon. A good/ low loan to value is key to getting the best rates out there. Your figures look competitive for a tracker deal.

The rate is competitive, but Im not sure about the fee for 2 years of a £70k balance. With your LTV I'd be shopping around for a no fee deal given the low balance on the mortgage.

Can you get quotes/an offer sorted I advance of June? I think they’re normally held for 3-6 months, so then you could see what’s happening in June and compare before you sign up to anything?

Yes you can usually switch up to around three months ( if staying with the same provider) before the current deal expires and set the new product to begin at any time until then ( continuing your current low rate as long as possible perhaps). But a variable deal will always change when the base rate moves.

I have just set up a product transfer with my current lender (halifax) that will kick in on 1st May at current rates if I do nothing else.

Its fee free, and if rates drop I can make a new application to a different product between now and then with no penalty.

An excellent rates 'hedging' suggestion and good no fee deals seem to be around. I assume you couldn't do a new application if rates fell and there was a fee.

Presumably they would check at the time if you’re still getting a good deal, and if rates had dropped they would give you the better one?

I didn't look at any deals with a fee, my mortgage is only £40k now.

My guess would be if the deal had a fee you'd lose the fee paid if you cancelled. Which may be worth it for a particularly good deal but unlikely to be worth it if you'd lose a large fee

The advisor in branch was very much insistent that it's on me to keep an eye and cancel. Now I've applied, its automatic unless I actively cancel. It's a 5 year fix which will take me to the end of my mortgage, and the early repayment fee will kick in if I don't cancel.

A 1k fee over 2 years on a 70 loan might add around 1% to the APR for comparison , the offer should outline the figure. The effective APR will be more than the headline mortgage rate.

Ah - that’s disappointing. I work for a company that does various products including equity release but not standard mortgages, and I know we would always do a final check for the customer’s best interests to see if current rates are better before putting a new contract into force.

OP, there’s an article here about looking around for a deal before yours has expired - there’s a warning that you might have to pay product fees to lock in a deal which not all providers would refund if you wanted to change your mind nearer the time
www.moneysavingexpert.com/news/2022/08/major-mortgage-lenders-amend-product-transfer-rules-to-allow-hom/

Have you checked non fee products. Really £1k on £70k is expensive I think. I’ve just got 4.99% no fee 2 years but stayed its current provider. I think rates are now slightly lower. I think, you can apply for a product now for it to start in June. Check.

The forecast is currently that rates will peak at 4-5% at the end of 2023. But that is just a forecast and inflation (particularly food inflation) doesn't seem to be slowing down as much as it needs to just yet.

My fix runs out in April. I have got an offer of a five year fix at 4.88% or a tracker at 0.54% above base rate.

I'm waiting to see what the BOE are saying later in the month before the 2nd February interest rate announcement.

A BOE increase in Feb might not lead to an increase in mortgage interest rates on fixed rate products. The difference in the swaps rate and the BOE base rate is still much more than we would expect (still recovering from Truss).

Many thanks all. And thank you for the poster who shared the link. Very useful. You're right about the £1k fee for £70k loan being too much. I decided to take a two year fix at 5.44% for 2 years, no product fee. This is £120 a month extra from June just on interest. I hope I've done the right thing. Thanks again everyone

@Iwritethissittinginthekitchensink many thanks for link. I am with NatWest so very relevant to me. Much appreciated

i have just reserved my rate for when my fix ends in June and my mortgage advisor will check between now and then if anything better comes up so we can switch. Find yourself a good mortgage advisor who will do that for you. I definitely think it’s worth reserving a rate now for piece of mind in case rates go up again (although my advisor seemed to think they won’t)