Remortgage - Fix for How Many Years?

[Welshbeef]

Jockman said:

A Fix isn't a gamble?

That's certainly an interesting angle, especially with some of the tales above.

Well if you fixed for 25 years @0% there would be zero risk.

Let's say you can fix at 2.49% for ten years - you could get it cheaper and "win" but your looking st a max of 1.25% saving. That might be enough to challenge some whilst others may disagree


Would a ten year fix now at 6.5% be a gamble? I'd say yes it is as it would need massive base rate moves to get to that level.


Is fixing for any period of time a gamble? Yes it removes part of the flexibility.

[toon10]

My 2 year deal comes to an end at the end of September. Just been told I can fix the current deal for another 2 years with no forms, just the click of a button. No fee and 1.64%. Looking at some of the deals on here, it's not bad but not the best either. Fee and hassle free though.

[Sarnie]

toon10 said:

hassle free though.

^^^Thats what your lender is banking on..............

Edited by Sarnie on Wednesday 5th July 14:23

[bogie]

Ive fixed my mortgage twice since early 90s and both time lost out on rate drops, would have been better off on SVR. Since 2007 have been on SVR and saved thousands/years on the mortgage.

The gamble goes both ways, although the position we are in now is unusual with rates so low, its almost inevitable rates will go up....by how much and for how long no-one really knows......

[Welshbeef]

bogie said:

Ive fixed my mortgage twice since early 90s and both time lost out on rate drops, would have been better off on SVR. Since 2007 have been on SVR and saved thousands/years on the mortgage.

The gamble goes both ways, although the position we are in now is unusual with rates so low, its almost inevitable rates will go up....by how much and for how long no-one really knows......

Depending how things play out over the next few years the BOE might have no choice but keep them low as it's such a significant transition adding in vast reduction of available consumer spending will hammer the economy.

[bmwmike]

Can't see mortgage rates getting lower than they are today. They can certainly go higher. Will they? Possibly. Who knows. Just that to me, there doesn't seem to be any upside but lots of downside risk (rates rise).

[Welshbeef]

bmwmike said:

Can't see mortgage rates getting lower than they are today. They can certainly go higher. Will they? Possibly. Who knows. Just that to me, there doesn't seem to be any upside but lots of downside risk (rates rise).

But the key is how much of a rise is already baked into the longer term bank rate offerings?

[Guvernator]

bmwmike said:

Can't see mortgage rates getting lower than they are today. They can certainly go higher. Will they? Possibly. Who knows. Just that to me, there doesn't seem to be any upside but lots of downside risk (rates rise).

I'd say the exact opposite, interest rates have been unsustainably low for too long now and I say this as someone with a vested interest in them being low as I have a mortgage, however we have to consider the bigger picture. The artificially low interest rates have caused massive inflation as money is too cheap. Forget the official inflation figures, they are made up rubbish, just look at things like house prices etc to see the real indicative cost of inflation. It also means people who have savings aren't getting a decent return, most Western countries have a large older population who hold quite a lot of wealth in investments, low interest rates effect these people greatly which means they have less money to pump back into the economy. It would also cool down the current trend of people borrowing above their means. Again I say this as a homeowner. but house prices are way too high in this country and really could do with a bit of cooling down,

Yes a rate rise would hurt a lot of people but IMO it would be better to get it over with and then stabilise out the other side then just let the pressure build and build. We keep kicking the can down the road because the politicians and money men are too afraid of rocking the boat but we have to relieve the pressure at some point or risk a crash.

This guy says it better than I could actually

https://www.forbes.com/sites/realspin/2016/10/04/l...

[Welshbeef]

Guvernator said:

I'd say the exact opposite, interest rates have been unsustainably low for too long now and I say this as someone with a vested interest in them being low as I have a mortgage, however we have to consider the bigger picture. The artificially low interest rates have caused massive inflation as money is too cheap. Forget the official inflation figures, they are made up rubbish, just look at things like house prices etc to see the real indicative cost of inflation. It also means people who have savings aren't getting a decent return, most Western countries have a large older population who hold quite a lot of wealth in investments, low interest rates effect these people greatly which means they have less money to pump back into the economy. It would also cool down the current trend of people borrowing above their means. Again I say this as a homeowner. but house prices are way too high in this country and really could do with a bit of cooling down,

Yes a rate rise would hurt a lot of people but IMO it would be better to get it over with and then stabilise out the other side then just let the pressure build and build. We keep kicking the can down the road because the politicians and money men are too afraid of rocking the boat but we have to relieve the pressure at some point or risk a crash.

This guy says it better than I could actually

https://www.forbes.com/sites/realspin/2016/10/04/l...

Whilst in theory that's great - we have BREXIT to deal with. That will have an impact so to compound that with a massive reduction in consumer spending - + putting some people into big financial difficulty is a big call.


House price inflation is driven by
1. Massive population increase
2. Massive lack of building to meet those new requirements let alone dealing with the legacy lack of house building.
3. Non U.K. Resident buying up UK property due to the value of £ plus it's a safe place to invest.
4. Lots of people all want to live in the same place instead of spread over the whole of the UK.
5. QE was a cash giveaway to the public - for those who didn't realise that and get onboard bad luck.

[bogie]

Welshbeef said:

bmwmike said:

Can't see mortgage rates getting lower than they are today. They can certainly go higher. Will they? Possibly. Who knows. Just that to me, there doesn't seem to be any upside but lots of downside risk (rates rise).

But the key is how much of a rise is already baked into the longer term bank rate offerings?

Exactly ...the lenders are not making offers they intend to lose money on. There are always the fees to set up and get out. When I was stuck with a fixed rate it never worked out better to get out of it with the fees.

Maybe its different now, but last time I looked the headline rates looked great, until you took into account the setup fee then the total APR was +50% on what you would pay just leaving it on SVR.....

[Sarnie]

bogie said:

the lenders are not making offers they intend to lose money on.

Lenders don't always get it right either........just because they set a rate, that doesn't mean that they know they aren't going to lose out on that rate.

I was at a seminar recently and there were Chief Execs from the big six lenders....all were asked their thoughts on where the market goes.........all gave different answers.

Does anyone think that lenders 3 years ago offering 5 year fixed rates, knew Brexit was on the horizon?

They are playing the same (slightly more educated) guessing games as the rest of us.......................

[dogz]

Welshbeef said:

Out of the above list what do people think is be best option?

Use the pmt function in Excel and work it out for yourself. This will give you the monthly repayment for a given interest rate and principle sum

if rate is 2%
Months of borrowing is 300
and principle is £100000

=pmt(2%/12,300,100000)

Simple to do and what I do to calculate most of my deals

[bmwmike]

Guvernator said:

bmwmike said:

Can't see mortgage rates getting lower than they are today. They can certainly go higher. Will they? Possibly. Who knows. Just that to me, there doesn't seem to be any upside but lots of downside risk (rates rise).

I'd say the exact opposite, interest rates have been unsustainably low for too long now and I say this as someone with a vested interest in them being low as I have a mortgage, however we have to consider the bigger picture. The artificially low interest rates have caused massive inflation as money is too cheap. Forget the official inflation figures, they are made up rubbish, just look at things like house prices etc to see the real indicative cost of inflation. It also means people who have savings aren't getting a decent return, most Western countries have a large older population who hold quite a lot of wealth in investments, low interest rates effect these people greatly which means they have less money to pump back into the economy. It would also cool down the current trend of people borrowing above their means. Again I say this as a homeowner. but house prices are way too high in this country and really could do with a bit of cooling down,

Yes a rate rise would hurt a lot of people but IMO it would be better to get it over with and then stabilise out the other side then just let the pressure build and build. We keep kicking the can down the road because the politicians and money men are too afraid of rocking the boat but we have to relieve the pressure at some point or risk a crash.

This guy says it better than I could actually

https://www.forbes.com/sites/realspin/2016/10/04/l...

How are you saying the "exact opposite" when my position is that rates are more likely to rise than fall?

I got a five yr fix at 1.89 iirc and that's about at low (give or take .2%) I think a 5yr fix will ever be (ah gwan someone prove me wrong haha) but even if they drop to say 0.5 still far less upside than possible downside of 3 4 or 5% rates.

Brexit introduces a lot of uncertainty too.

[irish boy]

Willhire89 said:

Take a moment and think where you were, and what you were doing in life ten years ago and just how different your situation is (likely) now...............

Five years is a good chunk of time - ten is huge

I'm living in the same area, selling the same product for the same company.

20 years ago? Living in the same area selling the same product for the same company.

I'm 39 now....Lucky I enjoy it.

[Welshbeef]

For the very vast majority of people in the U.K. They get a 25 year mortgage and simply have no ability to overpay or reduce its term.

As such you have a market where a 25year fixed mortgage would be ideal - the USA have them as the norm, totally removes risk of monthlies changing.

[Guvernator]

bmwmike said:

How are you saying the "exact opposite" when my position is that rates are more likely to rise than fall?

I got a five yr fix at 1.89 iirc and that's about at low (give or take .2%) I think a 5yr fix will ever be (ah gwan someone prove me wrong haha) but even if they drop to say 0.5 still far less upside than possible downside of 3 4 or 5% rates.

Brexit introduces a lot of uncertainty too.

My exact opposite comment was aimed at the second sentence in your post about their not being any upside and all downside to rate rises which isn't really correct, especially in the context on the overall health of the UK's economy.

Edited by Guvernator on Thursday 6th July 12:22

[kentlad]

Welshbeef said:

Rates will not go down in ten years time instead they can only really go one way.

Please tell us how you know this oh wise one? Whilst you're there, can i have next weeks lotto numbers? There are already a handful of countries in Europe with negative interest rates and no, they aren't countries in trouble (i.e Greece). In fact, one of the biggest economies in the world (Japan) had a negative rate in 2016 & returned to 0% this year.

OP - pick a term that you THINK will best suit your current and potential future lifestyle / any changes you think may reasonably happen.

[Welshbeef]

kentlad said:

Please tell us how you know this oh wise one? Whilst you're there, can i have next weeks lotto numbers? There are already a handful of countries in Europe with negative interest rates and no, they aren't countries in trouble (i.e Greece). In fact, one of the biggest economies in the world (Japan) had a negative rate in 2016 & returned to 0% this year.

OP - pick a term that you THINK will best suit your current and potential future lifestyle / any changes you think may reasonably happen.

Let's say you can get a fixed for 10 years at 1% it frankly wouldn't matter if rates went negative as no banks would offer deals where they pay you to take out debt - if your on a deal which then moves negative that different.

Don't do lotto sadly mugs game - give directly to charity instead.

[drainbrain]

IMHO choosing a fixed rate is 100% done in order to forward plan your cash flow accurately.

NOT to gamble with guesses as to the future of interest rates.

[kentlad]

Welshbeef said:

Let's say you can get a fixed for 10 years at 1% it frankly wouldn't matter if rates went negative as no banks would offer deals where they pay you to take out debt - if your on a deal which then moves negative that different.

Don't do lotto sadly mugs game - give directly to charity instead.

Absolutely, but then their deals may change - I.e. %ge offered above base rate could change significantly...(which is how most banks/mortgage lenders work). a 10 year fixed deal could be around 2.5% currently depending on LTV & other factors, if rates don't get above 1.5% in the next 10 years then you've lost out. Which was kind of my point. (oh and no bank, in the current market would get close to offering a 1% deal for 10 years...)

Oh and RE lottery numbers, i was being sarcastic. Anyone who actually believes they have a chance at winning is frankly an idiot - odds are roughly 135m/1 to win the euro millions...you have more chance of being struck by lightening twice in your life time. It was a throw away comment to illustrate a point.