10 year fixed deal mortgage

[Froghat]

I’ve been quoted 4.63% for a ten-year fixed and the broker is recommending against it, saying the rate is too high and I should go for 5 or 2 year. Does anyone have any thoughts on fixing for this period? I know rates are never going to go back down past the low 3s and the long fixes are always going to be slightly higher. I’d be interested to know what others think.

@Froghat so it depends on your circumstances and attitude to risk also.

I personally wouldn’t want to fix at that rate for more than 5 years because we have moved around quite a lot as our circumstances have changed, new jobs etc and I would worry about feeling trapped somewhere or forced to stay with the same lender if we moved house. Also it’s a long time to bet on future mortgage rates at a time when the Bank of England base rate has recently peaked.

Still, it’s not a bad rate and mortgage rates are very unlikely to return to ultra low rates as you know. If you like the security of knowing what you are paying for a relatively long time I would pick the 5 year deal.

Some mortgages can be "ported" or moved across to a new property if you're planning a move. Maybe worth checking out OP.

It's hard to know what I would do. Reading other mortgage interest rate threads on here a lot seem to think that there will be a small drop in rates before the end of the year and then after that who knows?

10 years is a long time, so maybe interest rates will be lower in 2 years, but will be higher again in 5 or 8 years and you'd still be better off over the total period of the 10 year fix. Or maybe not.

I suppose you also have to consider how much you need or value the certainty. Also how big is your mortgage? Obviously we all want to get the best rate, but if a % or so will only make £30 or £50 difference, for example, I wouldn't really mind if I ended up paying that bit more for the security. Different if it was an amount I would actually feel.

Sorry, that probably isn't very helpful. It's a difficult decision.

Yes, I always picked a portable fixed rate mortgage in case we ever moved.

But even with portable mortgages you can only port them if you stay with the same lender which limits your options 🤷🏼‍♀️

The Office for Budget Responsibility has recently forecast that the BoE base rate will be 4.2% by the end of the year, 3.8% by the end of 25 and 3.5% by 2027.

Even if you believe they are likely to be largely correct in their assumptions (not everyone does), mortgage rates are likely to be higher than the base rate so the deal you’ve been offered sounds a decent one. It’s just a case of whether you personally feel comfortable securing a rate for 10 years that will fluctuate over that period of time.

Just to add to @Twiglets1 point about portable mortgage that you port the whole deal over and you can't change the overall term for the part you port. So if you take a 25 year mortgage and port in 7 years, you take that 18 year term with you. Only the top up bit could become a new 25 year term (or longer). This means you lose flexibility in managing the affordability of the monthly payments. It might be even though you CAN port a mortgage when you move on, you might feel it's not the best option for you when the time comes. And that's when those redemption fees hurt.

I wouldn't fix at all. Rates are bound to go down from the end of March.

I think a key question is what the redemption charges are. It all depends on this I would say....

I doubt that very much, more likley to increase.

"A lot of Brokers are still struggling with the changes in global market borrowing conditions imo. Also the lenders have been on a mission for volume - believing that base rates were headed down considerably and competing hard for a reduced pool of clients. They seem to be showing signs of backing away from that recently."

Spot on, even the BOJ is talking about raising rates now!

Did they predict that rates would rise at the fastest pace in 40 years as they have done recently? They don" have a clue what is going to happen in 2027.

They’ve had more success then you in predicting mortgage rates Crashy

I never predicted mortgage rates, just that when rates went up there would be tears before bedtime for the over-borrowed (most of the country sadly, LOL)

Where are you on your thinking now about "6 or 7 rate cuts this year"?

No that's not right crashy, most of the country is not over borrowed on private property. It is enough people to be significant, I'll give you that, but nearly a third of property is owned outright and a further third have manageable limited exposure - even in one of your apocalyptic crash scenarios they will be ok.
The debt ratios for BTL are considerably more of a problem...

You have given your views on the likelihood of mortgage rates rising on the threads about 6% mortgage rates.

As one example, when I started the current thread called "6% mortgage rates;trouble a'ht Mill" you commented "Interesting title but shouldn't the other one just change to 7% mortgage rates"?

I've already answered this but again, my opinion is still that we will have several BoE rate cuts this year (though admittedly more like 3 or 4 since the first one isn't now forecast until the summer).

I'm an outlier - I fixed at 3.33% for 15 years a year and half ago because I thought that interest rates were going to stay relatively high. I prefer knowing exactly how much I will be paying.

I think now I would sit on a short rate to see what happens.

I fixes Nov 2022 for 10 years at 2.3%. We paid a small penalty to end a previous 5 year deal at 1.99% when we saw what was happening to rates. We only have 13 years left and are overpaying like hell so we never have to have that worry again. OP at the rates being offered just now, I'd not look at fixing for too long. Fix for what you're comfy at but overpay for the rate you're worried about. Winwin as you'll pay off quicker but be ready for any rate rises.

This!
It's bonkers to me that people didn't especially older folks who have the experience of mortgages rates going up and down. Younger people inc Millenials at least have an excuse

Giving a view on the sort of levels we could reach isn"t the same as making rate predictions, you are posting articles that say "By year X base rate will be Y" which is obviously just absurd, no one can predict these things.

"Over-borrowed" covers more than just private property though, this is the Everything Bubble and it looks to be bursting, just look at councils and CRE for example. People are in hock for everything from their car to their holiday to their education to probably school fees and even weddings, that all affects the ability to service a mortgage and obtain more credit.

We are about to start this process and I have spoken with DH about how long we would be willing to fix for dependant on the rate.

At that rate I would fix for 10years. The very low rates were not 'the norm' they were an extreme at the lower end of the scale. There is no guarantee they will drop back to the 1/2%s.

Also o would much rather pick a rate with a comfortable monthly payment and be disappointed if rates dropped in that period than risk taking a lesser fix term and have to sell because we couldn't afford our payments increasing that much at time of renewal

"Also o would much rather pick a rate with a comfortable monthly payment and be disappointed if rates dropped in that period than risk taking a lesser fix term and have to sell because we couldn't afford our payments increasing that much at time of renewal"

Good point.

I don’t think anyone at all is expecting that they will drop back down to 1-2% for the foreseeable future so I agree with that.