Re-mortgage now or wait?

[Roger Irrelevant]

For the first time in a long time I have fixed my mortgage this time round. I've previously been on a string of two-year discount variables which has worked well, but this time round the 5-year fix rate my current lender was offering is well below where their current 2-year discount variable starts at, and I just think the prospect of regular rate cuts is going to keep receding into the future as it has been for a while. Plus if I'm wrong the worst that will happen is that I'll be paying exactly the same as I am now, which is fine.

[Caddyshack]

Roger Irrelevant said:

For the first time in a long time I have fixed my mortgage this time round. I've previously been on a string of two-year discount variables which has worked well, but this time round the 5-year fix rate my current lender was offering is well below where their current 2-year discount variable starts at, and I just think the prospect of regular rate cuts is going to keep receding into the future as it has been for a while. Plus if I'm wrong the worst that will happen is that I'll be paying exactly the same as I am now, which is fine.

I think rates will probably come down but as you say, it’s an acceptable deal now and you save money today compared to any other option.

[iacabu]

I tend to leave things until last minute so don't have time to consider other options

Out of these three options which would you be inclined to take?

2 year fix
£735
5.19%

2 year track
£785
5.79%
(BoE + 0.54%)

5 year fix
£689
4.61%

[asfault]

5 year fix. But then I've been wrong every single time I've taken a mortgage...

[Hustle_]

Tricky one IMO. Any fees? How do they compare?

[clio007]

Isn't the issue actually that lenders have been too quick offering the 4.x% deals expecting the rates to be lower and now that hasn't happened they are upping the rates to bring more uncertainty to the average folk?

[Caddyshack]

asfault said:

5 year fix. But then I've been wrong every single time I've taken a mortgage...

The lower rate is attractive, the fear is the fomo if rates drop as many expect.

[carreauchompeur]

…in which case the tracker starts to look attractive, not sure I’d have the nerve for it though.

Currently having reverse FOMO about my 1.7% deal running out next Oct. Why didn’t I fix for 10yrs? But then that’s not super common. Making the most of it and clearing as much as I can now…

[Caddyshack]

carreauchompeur said:

…in which case the tracker starts to look attractive, not sure I’d have the nerve for it though.

Currently having reverse FOMO about my 1.7% deal running out next Oct. Why didn’t I fix for 10yrs? But then that’s not super common. Making the most of it and clearing as much as I can now…

The tracker rates are now about 1% higher than a good fix so you could waste a lot each month before they dip below a fixed. You could jump to a fixed later but most no lock-in trackers have a 1000 fee to enter. There are still a lot of unknown dark clouds in the economy too so rates could still go up.

It’s a confusing time

[johnboy1975]

carreauchompeur said:

…in which case the tracker starts to look attractive, not sure I’d have the nerve for it though.

Currently having reverse FOMO about my 1.7% deal running out next Oct. Why didn’t I fix for 10yrs? But then that’s not super common. Making the most of it and clearing as much as I can now…

It isn't.

But if you'd asked yourself "where do you see rates in 10 years time" you'd probably have got the answer of "more than 1.7% (or 2.5%?? Not sure of 10 year fix rates). And you could lower the 10 to a 5 in that you'd be reducing after 5...

I'm in the same boat. Big regrets / "it is what it is" (the latter letting myself off quite lightly I reckon)

Speaking for myself, I didn't want the extra outlay for the initial 5 years. And possibly thought I could do a "splash and dash" and refix for similar in 5 years time. Which on all objective levels was doomed to failure. But that might be hindsight....

Sarnie, did you see many 10 year fixes? Were they (relatively) prohibitively expensive??

[Tim Cognito]

I know someone who fixed for 10 years in around 2021, think it was 1.7 or maybe 1.9? They're laughing now and good on them.

[blue_haddock]

johnboy1975 said:

carreauchompeur said:

…in which case the tracker starts to look attractive, not sure I’d have the nerve for it though.

Currently having reverse FOMO about my 1.7% deal running out next Oct. Why didn’t I fix for 10yrs? But then that’s not super common. Making the most of it and clearing as much as I can now…

It isn't.

But if you'd asked yourself "where do you see rates in 10 years time" you'd probably have got the answer of "more than 1.7% (or 2.5%?? Not sure of 10 year fix rates). And you could lower the 10 to a 5 in that you'd be reducing after 5...

I'm in the same boat. Big regrets / "it is what it is" (the latter letting myself off quite lightly I reckon)

Speaking for myself, I didn't want the extra outlay for the initial 5 years. And possibly thought I could do a "splash and dash" and refix for similar in 5 years time. Which on all objective levels was doomed to failure. But that might be hindsight....

Sarnie, did you see many 10 year fixes? Were they (relatively) prohibitively expensive??

5 years ago when we bought our current house rates were 0.01 and so they could only go one way which is why i took out a ten year fix @ 2.5%

Its obviously worked out brilliantly for me and now instead of over payments i'm putting as much cash as i can into 5% savings account so that as the mortgage hits the ten year point it should be enough to clear whatever is left outstanding.

[iacabu]

asfault said:

5 year fix. But then I've been wrong every single time I've taken a mortgage...

I made a mistake on my last one! Don't think I can be wrong with either, only time will tell which will work out cheaper

Hustle_ said:

Tricky one IMO. Any fees? How do they compare?

No fees, offers are from my current lender Halifax. A touch lower interest available through comparison sites, but with £999 fees and more hassle to sort.

Caddyshack said:

The lower rate is attractive, the fear is the fomo if rates drop as many expect.

This is exactly my trouble, as with everyone. Predictions seem to be 3% by the end of 2025, which would make the 2 year fix the choice. But who knows!?

[OoopsVoss]

This mornings inflation data points to CPI coming in at 2% in Q2 with core cooling significantly (4.2% down from 4.5%).

It does point towards BoE cuts coming down the pipe, the problem is when and potential for inflation to pick up again later in the year. Services and wage inflation is not the BoEs friend right now. The economy is also performing better than expected, the mild technical recession in late 2023 is now in reversal and growth figures being revised upwards (its anaemic - but in expansion territory). The low growth is probably going to require some form of monetary stimulus (read rate cuts), so most are biased towards cuts coming - even if inflation remains above the magical 2%. That's real GDP not nominal (before some of the jokers from NPE get excited).

Picking your mortgage deal is always personal, everyone's risk appetite is different. There is a lot to be said for knowing what you are paying exactly over the longer term, likewise some like the idea of benefitting from potential cuts.

SONIA is inverted, but that doesn't account for Black Swans.

[jrb43]

asfault said:

5 year fix. But then I've been wrong every single time I've taken a mortgage...

I too would take the 5 year fix. I too have been wrong on my last two mortgage decisions. But I'm optimistic it'll even out over the term.

Excel is your friend:

1) Model out what happens on the tracker if the rates stay constant for 2 quarters and then drop 0.25 each quarter until they hit 3.5 (which might be over ambitious anyway) vs taking the fixed. Or any other creative situation you want to look at.

2) Then decide how much you value certainty.

3) Then remember that an orangutan is about to be in charge of a nuclear arsenal for the next 4 years.

Since the mortgage companies have all the data - the only way you can "win" is to take on uncertainty for something that hasn't been factored in.

Our mortgage payments are much larger than yours and I'm probably going to be out £1500 over 2 years. But I'm sleeping relatively well.

[z4RRSchris]

2 year fix and hope that the situation in 2 years is equal to today or better.

unless labour fk it,

[okgo]

I’m debating buying a new house but I think it simply will have to wait until there’s at least a bit of a possibility of things improving before I want to increase my borrowing.

I’d be happy enough with a 4% (anything less would be great) but 5 makes the whole thing look a bit expensive really.

[Hustle_]

I had to make my decision in February but I went for a two year fix.

Personally, the tracker doesn't look attractive.

Also personally, I am taking the punt on the rates having reduced in two years' time, at which point I will hopefully be able to go onto a longer deal.

I also saw some analysis that showed that two year fix was the most popular product at that time. My mortgage advisor also told me they were doing a lot of two years.

I am a FTB taking on a pretty big mortgage but I am in it with 30% equity so hopefully there is not a significant risk that I will be in big trouble come remortgage time. Of course, there is still risk...

[ThingsBehindTheSun]

asfault said:

5 year fix. But then I've been wrong every single time I've taken a mortgage...

That is what I have gone for, I have also been wrong every single time in the past. The difference between the 2 year and 5 year fixed is quite large, I am overpaying 10% a year so my logic is have the lower rate for the first two years whilst the debt is at it's highest. If rates do fall after two years, hopefully because I owe 20% less by that point it will all sort of equalise.

The rate I have currently been offered is 4.64%, I have five months before the new mortgage starts so if rates fall I will be able to jump on a cheaper product.

My fag packet calculations are that if rates stay above 3% it will not make any difference, if they start with a 2 or even 1 in two to three years time it will hurt a little.

We are not talking a massive mortgage here so it would make maybe £100 a month difference.

As I have gone for a five year fix that is pretty much a guarantee that rates will fall massively in the next few years though......

[DonkeyApple]

johnboy1975 said:

It isn't.

But if you'd asked yourself "where do you see rates in 10 years time" you'd probably have got the answer of "more than 1.7% (or 2.5%?? Not sure of 10 year fix rates). And you could lower the 10 to a 5 in that you'd be reducing after 5...

I'm in the same boat. Big regrets / "it is what it is" (the latter letting myself off quite lightly I reckon)

Speaking for myself, I didn't want the extra outlay for the initial 5 years. And possibly thought I could do a "splash and dash" and refix for similar in 5 years time. Which on all objective levels was doomed to failure. But that might be hindsight....

Sarnie, did you see many 10 year fixes? Were they (relatively) prohibitively expensive??

10 year rates kept disappearing over the previous decade. And when they were on the table they often didn't look hugely competitive.

There were moments when they were in the market and great value but I'm not sure there's any mileage in self flagellation as the odds of facing a renewal window when that was the case might have been long.

Harry Hindsight, the greatest and wealthiest chap any of us will ever know but the bloke's actually a complete tool as he's rarely around when you need him.