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 :(

We’ll be fixing for 5 years, but we’re in the lowest LTV bracket. I’ve regretted previous 5 year fixes when house price increases have then meant we’re paying more than we would due to dropping into a lower LTV.

Unfortunately no one can predict whether you’ll regret a 5 year fix (because you might pay too much) or a 2 year fix (because interest rates might be higher in 2 years, so you might then pay more than you would have).

I can't decide either. The main thing that is putting me off a longer fix is the early repayment charges. If we need to redeem the mortgage it is 1% per remaining year left so could be quite a substantial charge.

Interest rate wise there is little difference so on that basis I would go for the 5 year fixed. We are remortgaging with HSBC and the 5 year and 3 year fixed are 1.19% and 2 year is 1.09%.

@Sandrine1982 how much difference is it a month? I would think carefully about going for 2 years as tempting as it is. Will you want to sell up in 2 years? When you come to renew, I'm sure the rates will be higher. You'll also need to pay the product fee which is often £1000, so do remember to factor that in

Just early fixed for five years at 1.24% we are old and mortgage is massive (bought late so crappy house over shortish term of 18 years originally). Previously was 2 years.

Rates are so ridiculously low, I would fix for as long as possible...has everyone forgotten when rates were 9% plus...??...I fixed for 10 years once at 7 or 8% and then rates went to about 14% for a while...but they wont reach those hights again as market will crash etc..

are you the M netter who looked at the house in tyndall road...?? your name sounds familiar..??...!!

We fixed for 10yrs last year - I did the maths over the lifetime of the fixed periods, and this worked out the same as if we had two 5yr fixed back to back even with the lower rate.

Contact a broker. Given things are likely to go up in the next few years, it's unlikely mortgages will be cheaper (% wise, not house price wise!) in the next decade.

We recently fixed for 5 years. Interest rates are only going to go one way.

To be honest I do think they will go up but not by a huge amount. So do a couple of calculations on what you could be paying in 2 years time if they go up by 0.5%, 1%, 1.5% if the total is well in excess of £150 a month I’d be tempted to fix for 5 years. Also consider life in the next 5 years children, school/uni fees? How much certainty do you want on payments?