2-year or 5-year fix? By how much are interest rates going to rise?

[Sandrine1982]

I know this has been debated before!
So what do you think?

We've always used 2-year fixes and we like the flexibility and low interest rates, but now that we keep hearing that the interest rates are going to increase ... should we perhaps go for a 5-year fix?

The difference in monthly payments will be about £150 so quite a bump :(

Anyone?

Rates are at an historic low. If you can afford to fix for 5 years I would

We’re fixing for 5. Always a gamble but so low it feels worth it.

We fixed for 5 last year
Even if they dropped slightly we felt the stability for that period to be so low was worth it

I'd fix for 5.

@Sandrine1982 we fixed for 7 years as only £30 more expensive than 5 and were happy to risk incase rates went up after 5 years.

Do 5 if you can. Remember to factor in survey fees / product rates for when you renew after 5 as depending on how much you're borrowing could be worth doing 7 years

We've gone with a 5 year fix. Seems sensible with such low rates at the moment.

The only way I would consider a 2 year currently would be if I was planning work on the house that would increase the value to the point that I would fall into a lower LTV bracket. That would likely be worth it but obviously a slight gamble as who knows what interest rates will do. Every expert has differing opinions.

We fixed for 5 years with the view it would help us weather any volatility in interest rates post Brexit/Covid etc. If you can afford to stretch to the slightly higher rate for a 5 year fix, I would do it.

We were quoted the following:

1.79% for a 2 year fix on 75% LTV
and
2.09% for a 5 year fix on 75% LTV

The above were TSB deals through a Broker in April 2021. Would highly recommend going through a Broker. We used CMME.

I fixed for 5 years and I’ve had trackers and two year fixes in the past. The rates are low, the future seems uncertain. I felt it made sense.

We fixed for 5 years.

We fixed for 5 years. 1.24% would be mad not to.

Do beware early repayment fees on long terms. If you need to clear the mortgage due to downsize, divorce, or take out more money, then the early repayment fees can be eye-watering.

On the flip side, rates can only go one way from the current position.

Moved in June and we took a 5 year fix

We fixed for 5, last October. We had no plans to go anywhere so felt it the safest course of action.

Definitely fix for five years, we have been offered a five year fix @ 1.15 %

@Rollercoaster1920

Do beware early repayment fees on long terms. If you need to clear the mortgage due to downsize, divorce, or take out more money, then the early repayment fees can be eye-watering.

On the flip side, rates can only go one way from the current position.

Or you want to move house and can’t align buying and selling!

Our 5 year fix would be around 2% because we are at 85% lvt. Big mortgage too :(

Whereas 2 year fix would be 1.52%

Those all time lows are creeping up. I’d fix for 5 years if you can afford the monthly payments and aren’t planning to move during that time

I'm trying to decide what to do as well. Also trying to decide whether I'll stick with my current lender (Nationwide) or move for a cheaper rate, but need a mortgage broker & all the paperwork/hassle again.

@FWBNC

I'm trying to decide what to do as well. Also trying to decide whether I'll stick with my current lender (Nationwide) or move for a cheaper rate, but need a mortgage broker & all the paperwork/hassle again.

Money saving expert has a good comparison calculator - stick in your numbers and it shows you rates for loads of different banks. It'll give you a good idea if the potential savings are worth the hassle before you go to lots of hassle!

We just went for a 5 year fixed on the advice of our broker. The payment difference between a 2 year and 5 year was only £25 for us though, £150 is quite a lot so it would depend on whether you can actually afford that right now. If you can, I'd go for a 5 year fix in your shoes this article is interesting.

I also did a 5 year fixed. I was debating between 3 and 5 but in the end I decided I’d rather have the security of knowing my payments wouldn’t rise, plus didn’t want to deal with the extra costs in three years time!

@FWBNC

I'm trying to decide what to do as well. Also trying to decide whether I'll stick with my current lender (Nationwide) or move for a cheaper rate, but need a mortgage broker & all the paperwork/hassle again.

We are with Nationwide and we have stuck with them as they always seem to offer us a really good rate. We've just fixed for 5 years (usually do 2) and rate is less than 1%. There is a 999 fee but we did it all online and it allowed us to reduce our term by a year at the same time which they have never allowed us to do online before. Our current rate doesn't end until end of Feb next year but they let you switch early

I've just fixed at 5 years with no fee which was the most expensive of all options but still cheaper than what I'm paying now.
I normally do 2 years.
It suited my circumstances and by the end of these 5 years, I feel I will be in a situation where I will make decisions about retirement and how my investments are doing etc.
I could have used a fairly massive redundancy payment to clear a large chunk of my mortgage but I decided to invest instead and it's paid off so far as I have had a 15% return on the investment which is better than paying off a low interest rate mortgage.