Fixed rate?

[DrMaxwell]

We've been offered 2 years fixed at 4.59% or 5 years fixed at 4.35%. Obviously we're going to have a conversation and get the brokers opinion but what would you do?

I would fix for 2 years seeing as rates are expected to fall not rise in the next 2 years. Then refix after 2 years - ideally through the same lender if they give you a competitive quote because then you won't have to pay arrangement fees again.

I would fix for 2 years. Rates on offer are likely to be lower then.

Given the inflationary pressures from the largesse, id go 5 yrs . Rates are not going down for some time

I’d fix for 5 years at 4.35%, the chances of the inflationary / political / environment pressures on goods, services and labour going away in next 2 years is pretty low. Even if BOE drops interest rates again, for no guarantee that banks will
adjust their product rates downwards if they don’t think economy is healthy.

IMHO chance of getting sub 4% in 2 years is low, and you’ll have benefitted from lower interest now when you owe more capital these next 2 years.

I'm very tempted by the 5 year deal, it feels reassuring to know what we need to budget for (long term renter) and we know that as things stand we can afford the repayments.

I think that’s the only reason that makes much sense at the moment for choosing a 5 year fix - it does make budgeting easier knowing what you’ll be paying for the next 5 years. Personally it would annoy me to pay more than I possibly had to but I guess that’s the price of security.

I think it depends on the size of your mortgage and how many more years you expect to be paying it for. We are porting our current mortgage (we have another year left on an amazing 5 year deal) but extending the mortgage slightly for our new house purchase. We've gone for 2 years on our top up portion, but that's because we hope to pay off our mortgage in less than 5 years and even if rates went up, it wouldn't make a massive difference to our monthly payments.

If I had 10+ years left to run, the 5-year fix would be tempting, especially if I wanted the comfort of knowing what my monthly repayments would be.

The fact rates are forecast to go down is already factored into the 5 year rate being cheaper. If there are fees associated with re-mortgaging in two years and fees this time, it might be more expensive to do a short fix and pay fees again even if rates go down a bit given the 5 year rate is cheaper to begin with.

Personally, I would do the longer fix for the security as no one knows what will happen in 2 years time as these things are impacted by unexpected geo-political events. But I'm cautious.

1. Applying for a mortgage with associated fees and hassle is something I'd rather do less often if possible.

I'm going for 5. I locked in a rate a couple of months ago and they have already gone up not down.

I'd rather have security of 5 years as I'm not convinced they will go down much in two:

We used to fix based on where we were in life, so if a 5 year fix suited us then we would take that. We have been paying a mortgage for the last 24 years so have been through a number of fixes. Our last fix was for 5 years to see our youngest through uni so we know exactly what we will be paying until he leaves.

For us over the long term we took the best deal at the time and don't stress over the reduced rates whilst locked in because there have been times when the new rates have been much higher than our fixed rate so swings and roundabouts. For us it has been about the certainty of knowing what we will be paying for the next X years.

Ok but there is no fee if you stay with the same lender and very little hassle.

But it does reduce your opportunity to shop around so there's that.

Thank you all, it's really helpful to get different perspectives. My partner and I are mid forties and this will be a 23 year mortgage. We're buying a place together after his house finally selling. **

As PP said, potential reductions are already priced in. I’d take the 5 year deal.

Go 5 years on the off chance we might have a sane government by then.

Rates will be going up as government borrowing ever increases.