How long to fix for

[pinotnow]

I have to remortgage in January so starting to think about it now and just wondering what to do about fixing. I know rates are predicted to come down next month as well but what about after that? There still seems to be a lot of uncertainty around. I am risk averse and always like the idea of fixing for 5 years and then forgetting about it for a good long while, but are rates likely to come down in that period? I think they're unlikely to ever be as low as they were, or is that wrong?

My current lender is offering 3.94% for 5 years or 4.14% with no fee. They would both put my monthly bill at just over/under £100 more than it currently is, which is affordable and a relief, considering what has happened over the last couple of years. For 2 or 3 year fixes I'm looking at £20-£30 more, so not a huge amount, but is it even worth it as rates are unlikely to go lower?

Would love to know what others are doing/thinking.

The 'normal' rate over the last several decades at least has been around 5%, and since 1694 has been 5.9% (according to the Bank of England). The extraordinarily low rates in the last 15 years or so as a result of the Great Financial Crisis of 2007 were a historical anomaly very unlikely to be repeated in our lifetimes - at least we will have to hope so, because if they are our financial disasters will dwarf any concern about interest rates. But, the bigger point, is that you shouldn't choose whether to fix or not (or choose length of fix) based on guesses around what rates will do in future - and guesses are all they are - but instead on how much slack you have in your finances, and therefore how much risk you could take that your monthly mortgage costs will go up sharply If you have a large margin of safety, fix for a shorter period, although I have to say if you have a very large margin of safety you shouldn't fix at all but go with a good tracker as in the long run that will have been cheaper overall. But if rates going up substantially would cause you difficulty, fix for 5 years (assuming you will stay in the property for at least 5 years). TL:DR - Don't make the decision based on guesses about rates in the future, but on how much slack you have in your finances to cope with possible future mortgage costs that are sharply higher than those prevailing now.

It doesn’t matter if they go down. All brokers and most banks will give you the better rate before the mortgage is actually issued anyway. With brokers, it’s their job to inform you. With banks (at least First Direct) you have to call them and say “I see the rate on the product I booked is now lower, please give me that” and they will.

3.94% is a good rate, I assume you have a decent amount of equity in your home. However, rates are generally expected to continue to fall over the next 12-18 months. Not dramatically, but enough that personally I would be looking at a 2 year fix in the hope that rates will be lower at the point I need to remortgage.

However, no one knows for sure of course and some people prefer the security of fixing for a longer term so it's very much a personal decision.

Yes I'm only borrowing 35%. So annoying that the loan to value ratio is so much better than last time but it's still going to cost me more! I also had a phone call with L& C but the best deal they found was worse, even looking with my current lender, which seems weird. Maybe it's a personalised offer that they couldn't access.

I guess it's good that your current lender has given you the best offer though - makes it simpler to stay with the same lender. Maybe your current lender gave you a good rate because you are low risk to them.

I would lock into one of those deals with your current lender but look around again in about October to see if any lenders are offering any better deals by then.