Two or five year fixed rate - what would you do?

[Toospotty]

What the title says basically. We’re remortgaging and are being offered both. The five year is tempting as it insulates against global shock (and let’s face it, it’s fairly scary out there) but if rates are marching downwards, will we regret our five year in two years? Both rates are below 4% but nowhere near the 3.5% forecast for the end of the year, but we need to remortgage now and not wait, so we accept that we’ll miss out on any further reductions in 2025 whatever happens.

I've put this in Money but I thought this might on the minds of people here too! Obviously there are no crystal balls but interested in people's thinking.

I'm generally on the risk averse end of the spectrum so would tend to say take the 5 years as there are so many financial risks at present. Having said that, I do think that rates are likely to fall later in the year, possibly a lot, so I would probably take a variable rate for now and reassess in 6 months, possibly tying myself into a very long term then. Of course, this is not advice, just what I would probably do at this juncture myself.

i think there are 2 other factors…
how much equity do you have? If you have a high LTV and prices drop in the next 2 years would you come unstuck when you had to renew?
and if one of you lost your job could you afford to remortgage on just one salary when the 2 year deal ends? I like the security of knowing that we don’t need to show our hand to the bank for another 5 years and as long as we could scrape the payments together we’d be ok.
appreciate that 5 year deal could just be kicking the can down the road but hopefully if either of those happened in 5 years you’d have had more time to increase equity, get pay rises and save a decent/even better rainy day fund

We need to remortgage now unfortunately as we’re using it to fund some building work we need. We have enough equity to cushion a shock but do need two salaries for our current borrowing.

Following as we are in the exact same position OP. It’s nail biting!

Just out if interest, what have you been offered?

We are stuck on 3.98 to roll over with Santander.

3.97 on the two year and 3.93 on the five year.

Ooh, just rechecked and it’s 3.87!

I’d go 5 year, lots of variable ms that could adversely impact the market at the moment

Ooh. Interesting. Obvious our situations will vary!

No no it’s just changed since Friday! Make sure your broker is rechecking!

The rates are from this afternoon so fresh off the rack. We are probably too broke for your offer!

I've just seen a Lloyds customers offer for 3.88 which is lender only, and we are Lloyds customers, so I may have a chat to them tomorrow.

We are rolling over with our bank, our usual broker is keen to manage it though and I don’t mind him getting his as he’s been great to us over the (many) house moves etc. But I keep checking what we could get on the app JUST IN CASE he’s not keeping up (he is, just about!)

Last Friday was 3.98, today is 3.87 so they are either anticipating another cut next month or the market is extremely competitive for those selling mortgages and so they’re offering good deals. I expect there might have been property market slowdown after the stamp duty cliff edge (economists, do feel free to chime in and correct me?) so if lenders want to lend at volume they have to offer better rates. For now!!

Yes, I've read that lenders are moving downwards right now. We would at least benefit from any further reduction in the next month when the remortgage kicks in.

Yes do chat to them. It’s all so stressful isn’t it, I do feel for you, our first fix on this house was horrific as it was a full renovation and some lenders classed it as unliveable therefore unlendable, so I have definitely been there. Stay strong!

I think by law if there’s a better rate you are entitled to go for it up to two weeks before refinancing date?

I'm in the same boat. Leaning more towards the 2 year fixed at the moment...

Not sure when the cut off is but you definitely get moved to the better rate if your offer product shifts until that point.

I think rates will probably come down, so I’d go for a two year.

But - you never know!

If it helps anyone else, we inevitably make the wrong decision on financial decisions every time, so I'd suggest you all do the opposite of whatever we decide.

When we did building work , we had a no ties mortgage to release funds then fixed once the work was done and the ltv was better.
you need a good broker!

This terrifies me!

most of my mortgage is on a 1.4% fixed. The other £30k on a 5.75 took additional to move.

mine ends dec 26. Even if rates get to 3.5% still double my current payments. If I had to remortgage now I’d look at variable until the end of the year see if the rate goes to a fixable level or a 2 year fix. I currently do 5 but those rates are scary right now. I think it would offer potential more financial expose on 5 years than it would mitigation. For me anyway

We've got a broker! We just don't want to have to run through two mortgage applications and add extra risk to the process. Or pay masses extra each month while constantly trying to decide when to jump to a fixed rate.

I'm just signing up to a 5 year fix at 4.2. I only have 12 years left on a £60k mortgage so it's only a difference of + £38 a month and I want the stability of the same payments. If I had a larger mortgage I'd be going for 2 years

I’m in a similar situation , my fixed rate ends in 5 weeks time, as a single person on a lower income I’m probably going to go for the 5 year deal. It’s gives me stability and as my mortgage amount is fairly low (70k) the 2 year fixed rate isn’t much cheaper. I. Not a risk taker when it comes to money so stability means more to me.

Bank charges 1k for every new fix... something to bear in mind for small mortgages... and the fact that in the long run the market always wins.

The problem with two years is it feels like tomorrow! So any rollercoaster of rates and you'll be worried almost immediately on signing this one! Plus if you pay a fee there's another fee to find in 24 months time.

5 years feels like there's some breathing space.

But no one knows which will be better. One day it seems its going up then Trump says something, or a global action happens, and it over reacts (either way).