Interest rate - what would you do?

[Namechanged4dis]

Would you fix for 2 years at 1.73% or 5 years at 1.99%?
First time buyers

5 years

5 years

5 years! Especially now.

5 years (we’ve fixed for 15!)

5 years. They are only going to go one way in the new year (up!).

I think fix for the longer term

5 years. The component of your monthly repayment that's interest is at the highest level at the start. So interest rate rises will hurt you most now, a little less in 5 years.

5 years.

We had to fix 5 years at 4.5% so with your rate I'd say that's the only option!!

I had this 2 or 5 year fix dilemma last week.

I used a spreadsheet to roughly calculate a 4% interest rate after fix ended.

Ive opted for a 5 year fix.

5 years definitely!

5 years

Didn’t explain myself well.

Spreadsheet was for various scenarios dep, interest rate and fixes.

It ‘proved’ that if we took a 2 year fix, then fell to 4% at fix end, we would pay 15k more at year 5 than if we had fixed for 5 years.

Inspiration for this was having to dig out my current mortgage paperwork, the original fix was 5%.

5 year definitely!!!!

For a first time buyer I’d say opt for 5 years fix, as unlikely you’ll want to move again in 2 years.

We’re remortgaging early next year and will probably opt for 2 year fix only as we’re thinking of moving after two years.

5 years without a doubt

5 years
I did this in 2019 and have not regretted it

5 years

Five years no doubt

5 year fix. Rates Look likely to still be going upwards for more than 2 years and rates for a fix will be higher then.

If you are planning to stay in the property for 5 years plus then fix for 5. If you think you'll move after a couple of years then look at the redemption fee on the 5 year fix as the % on a big mortgage could be material. Some mortgages will allow you to port them and not incur redemption fees. Read the small print. But at those rates I'd say 5 year fix.

Well that's a unanimous answer. Thank you all. Looks like 5 year it is.

We fixed for five. Be careful how you calculate your alternatives though, at the end of a two year fix you will surely take another deal and not spend three years on variable rate for no reason.

If your income, house value, alternate outgoings, or creditworthiness is likely to improve significantly over the next two years a two year fix followed by another five year fix may well work out cheaper than taking a relatively expensive five year fix now.

All that said we went for a five year fix, but put a 25% deposit down and had only borrowed half what the bank were offering so got a very low rate.

We had this dilemma a couple of months ago and have fixed for 5. Not that we're first time buyers, but there's only one way for interest rates to go from here and it's not down.

The prediction is that interest rates will rise by about 1% over the next year. So if you go for a 2 year fix you will get a worse interest rate, than the 1.99%, when you come to remortgage. Even if by then you are in a better LTV bracket.
To that you have to add an extra set of arrangement fees so unless you're planning to move before the 5 years are up a longer fix makes the most sense.