Mortgages - how long would you fix for right now?

[CouldIBeAnymoreOuting]

People who are remortgaging over the next couple of months, how long are you fixing for?

Our offerings are 5yrs fixed at 4.54%, 2yrs at 4.7%, and 1yr at 4.9%

We were on a very low rate and our monthly repayment will be going up by £700-800. Not keen on paying that for 5 yrs, but if rates go up further our affordability will be very very tight.

The 1yr is tempting as feels relatively low risk if we can negotiate a new rate (possibly lower or at least similar to what we are being offered now) after only 6 months? …Unless rates drastically rise again within that 6 months.

A crystal ball would be handy!

If I had to fix now, it would be for 2yrs max and then reassess in 2yrs time. If the repayments are too costly, I would extend the term at remortgage time.

Are you being charged a fee for fixing them at these rates? Because that is something that has to be taken into account.

Mortgage rates are widely expected to fall over the next few years (though not to the ultra low rates you are currently enjoying) so I would be a bit reluctant to fix for 5 years personally.

I’d be going for 5 years but that’s due to my circumstances I’d want fixed outgoings and to hedge against wild card world events.

i think you also need to factor in arrangement fees so you can compare apples to apples

Depends on personal circumstances, priorities and whether you can afford to take any risk.

When the DC were small and we were stretching ourselves I fixed for 5 years. I would do that irrespective of what I thought interest rates might do. I was not in a position to take any risk during the double-nursery-fees years.

Now our mortgage is much smaller vs our income, and no nursery fees, and we may be able to make over payments, I will look to see what trackers are around.

We’re fixing for 2 but at a horrible rate 😭

I'd probably fix for two years given the uncertainty of a general election this year and what might happen before or after that.

Just to add @CouldIBeAnymoreOuting I have linked to an article that asks the question When will mortgage rates come down?

"In March 2024, mortgage rates on fixed rate mortgages increased in the UK after falling for several months as the prospect faded of imminent Bank of England interest rate cuts.

Financial markets are currently predicting the first cut in interest rates will be in July 2024, falling to 3.74% by the end of 2025. As a general rule: if interest rates fall, the mortgage rate forecast would be for mortgage rates to fall too".

https://hoa.org.uk/advice/guides-for-homeowners/i-am-managing-2/mortgage-rate-forecast/#:~:text=While%20it's%20not%20possible%20to,in%202027%20across%20all%20properties.

I might stay in variable for now hoping they come down a bit more

We will do 5 or 10 years when we're due early next year dependent on the difference between the rates. We're hoping to repay the mortgage in 2035 though.

So the 1 yr has no product fee and the others have a £999 fee. Makes the repayment cost of the 1yr effectively the same as the 2yr with product fee.

We are already at maximum repayment term so no option to up that.

I would do this too

We fixed for 10 years at 4%, with no early redemption fee. Not the cheapest we could have got at the time, but gives us an out if rates drop significantly.

the SVR is 8%. We’d definitely save money with a 1 or 2 year fix unless rates drop dramatically within a few months from now.

What's your LTV?

It was possible to get sub 4% rates only a few weeks ago on LTVs under 75%...so if you can hold out a few weeks it's likely rares will start coming down

In that situation with no fee for it I would go for the 1 year for now.

65% LTV, so eligible for most 75% rates and a good few years off from reaching 60% LTV. Mortgage isn’t actually up until end of May so we do have another month or so to see if anything changes with rates. Will lock in a deal now anyway, though.

In that case I would opt for the 1 year with no fee as that's still a lot lower than the SVR and does give you the option to fix a new rate in 2025 when rates will hopefully be a little lower.

It does depend on your attitude to risk though as some people would prefer to know exactly what they will be paying for the next 2 or 5 years.

What's the tracker rates looking like?

Martin Lewis predicts rates will begin to slowly come down over the next couple of years but not to the low level they have been at in recent years.
If it was me I’d fix for one year looking at your options and re-asses in 12 months in the hope they do come down a bit as predicted. Good luck 🤞

We're planning to fix for five years when we buy this year.

At our stage in life (two young children with nursery fees), a lower monthly payment is our priority. We also like the security of having fixed for 5 years just in case rates do go up again. 5 years coincides with the end of nursery fees and ability to start overpaying our mortgage or having more spare cash.

If it was just us and we had a looser budget, we'd fix for two.

In that case I'd do the 1 year and by then I suspect inflation will be down to 2 percent and B of E will finally reduce rates again. This month only 1 person voted for a 0.25 percent drop but at least 2 did not vote for an increase like the previous month.

Tracker is 5.5% and around £300 more per month than the fixed deals. So unless we are sure rates will come down significantly before 1-2yrs time, I don’t think the tracker will save us much.

I’m leaning this way with the 1yr deal.

I’d like to know what I’m paying over the next 2-5yrs, but I also don’t want to pay the current rate for the next 5 years. Everything is going on the mortgage payments and cost of living. No holidays or savings. 5 more years of that is not ideal…but obviously neither would be a significant rate increase after a 1 or 2 year mortgage.

I went for 5 years, but we were offered 4.14% in the pre-Christmas mortgage price war, and didn’t think we’d get that again in a hurry. Not available now! The equivalent deal is now 4.39%.