Tracker or Fixed mortgage

[Rich]

Another 0.5% increase, that's 1% since I started our tracker deal last month. Repayments will be £60 more a month from October to what it was when we took the deal. I wasn't expecting it to increase this quickly, are we likely to see 3% or higher before 2023. 

[Rich]

Wow, what is Truss and the Government up to!! Things are just going from bad to worse. Seems they're predicting the base rate to increase to 6% by next year.

I really don't know what to do now. The more I think about it the less keen I am to rent when we move with how things are. I was hoping to move before things got worse. We're planning on going next year but it's trying to get a job and move at the same time that's concerning me. Especially when I haven't really seen any jobs to apply for yet. 

Or just take a fix now for 2 years, I can get just over 4% and put our move off. But what if property prices continue to rise, we could find ourselves not being able to afford a house we really want and having to settle for something else. If we're moving 150 miles away I'd rather get a house that we're going to love, not just like!

[Viking]

My thoughts?  Stick with security right now. Fix your mortgage for as long as you can, you have a job so stay put, let the world sort itself out and settle down a bit. House prices will go up or down but I'd be sticking with a fixed mortgage currently. In any case, you can always pay early exit fees and move if things change for the better.

[Rich]

Well they're predicting a 15% price reduction but that's all relative if it happens and where we're moving to may fall even further.

I can fix for 2 years at 4.39% now with a 3% ERC plus a £999 fee. 5 years is 4.14% but the ERC on that is 5%!

The whole point of taking the tracker deal was to avoid paying the ERC. If we move within a year the tracker we're on is still better than paying the ERC, plus the extra £999 for changing again. I hate wasting money so the thought of paying another fee and the ERC if we end up going next year doesn't sit well with me. That would be several thousand.

Like you say my job is fairly secure here and I can make overpayments towards the capital when I can. This has really buggered our plans though!

There's probably not much point contacting my mortgage guy, I doubt he can access any deals better than what my provider is offering.

[Viking]

20 hours ago, Rich said:

There's probably not much point contacting my mortgage guy, I doubt he can access any deals better than what my provider is offering.

No harm in trying though. See what options he has, if he has access to the whole market.

[eddie]

On 27/09/2022 at 09:22, Rich said:

Wow, what is Truss and the Government up to!! Things are just going from bad to worse. Seems they're predicting the base rate to increase to 6% by next year.

I really don't know what to do now. The more I think about it the less keen I am to rent when we move with how things are. I was hoping to move before things got worse. We're planning on going next year but it's trying to get a job and move at the same time that's concerning me. Especially when I haven't really seen any jobs to apply for yet. 

Or just take a fix now for 2 years, I can get just over 4% and put our move off. But what if property prices continue to rise, we could find ourselves not being able to afford a house we really want and having to settle for something else. If we're moving 150 miles away I'd rather get a house that we're going to love, not just like!

I have seen predictions of up to 8% on interest rates - I'm pretty exposed as on the SVR on my mortgage - have been looking at fixing but the fees have shot up and when you are a bit older its harder to remortgage as the banks seem to be allergic to lending to people over 50!

[adam_r]

Nationwide are fixing for 10 years at 4.89% if you pay the £1000 product fee

[Rich]

28 minutes ago, adam_r said:

Nationwide are fixing for 10 years at 4.89% if you pay the £1000 product fee

That's pretty good considering. Could that be a sign they don't think things will be as bad as they're predicting.

3 hours ago, eddie said:

I have seen predictions of up to 8% on interest rates - I'm pretty exposed as on the SVR on my mortgage - have been looking at fixing but the fees have shot up and when you are a bit older its harder to remortgage as the banks seem to be allergic to lending to people over 50!

Have you just come off a fixed rate deal or have you been on a SVR for a while?

Guess it depends what the rate is but I would've thought that'd make your repayments quite high. My fix was 1.89% but the SVR would've been 5% if I left it.

[eddie]

On 02/10/2022 at 13:27, Rich said:

That's pretty good considering. Could that be a sign they don't think things will be as bad as they're predicting.

Have you just come off a fixed rate deal or have you been on a SVR for a while?

Guess it depends what the rate is but I would've thought that'd make your repayments quite high. My fix was 1.89% but the SVR would've been 5% if I left it.

Fixed deal of 5 years at 2% odd ended and I forgot to renew it as was so busy with work - payments up of course now and the mrs is fuming with me for not sorting it.

That nationwide deal looks ok will look into that as well as natwest who seem to be best buy this week

[Rich]

2 hours ago, eddie said:

Fixed deal of 5 years at 2% odd ended and I forgot to renew it as was so busy with work - payments up of course now and the mrs is fuming with me for not sorting it.

That nationwide deal looks ok will look into that as well as natwest who seem to be best buy this week

Oops! Easily done though, I have a few things I've been meaning to sort out and still haven't got around to doing.

I checked my offers with Santander earlier and the best 2 year fixed rate is 5.89%! ☹️

[Rich]

Another base rate increase so I'm now paying nearly £300 more a month than what I was when I took the tracker out! That's on top of the utility bills, council tax, food increases etc.

We'll now be on 5.44% but it sounds like things may settle now. I can get a fixed rate deal for 4% if I lock in for 5 or 7 years. Still not worth doing with our planned move though, as long as we do it soon. Or do I fix in and put it off for 2 years or try to port the mortgage and look for a property we can move it to.

[Rich]

Base rate is now 5% and their excuse for increasing it is to slow down inflation, yet after the 13th consecutive rise it's still not working!

Really in a catch-22 situation now. Need to fix asap as our tracker will be 6.19% but I can't do that until I know if we're moving. I won't know that until work decide whether to give me this promotion. If they do then I'll fix for a year, possibly two. It won't make the repayments that much cheaper but will protect us from further rises.

[Rich]

Now I know we're staying for a little longer I'm going to fix for 2 years. We're currently with Santander and with no product fee it'll be 5.83%! A little cheaper with a £999 fee.

I'm waiting for my mortgage guy to get back to me first in case he can get anything better but I very much doubt if he can.

I think they're predicting rates to increase another 1-1½% by the end of 2023. Then settle and maybe drop in a couple of years but who knows what will really happen. Crazy times ahead.

Asking/sold STC prices haven't really dropped that much where I live now but they all are in Norfolk where we want to move to. Putting a move off for another year or two might work in our favour if we could get something better for less money.

[eddie]

Hard to predict where things will be in a few months time. Best to fix for a couple of year & then at least you know what you will be paying. Hopefully by the end of it inflation is under control and then interest rates can stabilise or even fall a bit

[Rich]

Unfortunately my mortgage guy didn't contact me in time before Santander put their rates up so a 2 year fix is now 6.49%! He's also on annual leave but has said he'll speak to me on Tuesday and to not fix with Santander just yet as there are better deals to be had with the rates dropping slightly this week.

It's such a dilemma as I would stay on the tracker we have but if the base rate goes above 6% we'll start struggling. I don't think I can take that chance.

[Rich]

I ended up switching to another 2 year tracker, 0.34% instead of the 1.19% we were on. 

It's madness to fix above 2 years at the moment with rates around 5%. It looks like they're dropping slowly already so hopefully that will continue next year. Just need them to drop the base rate!

[Rich]

I'm not sure if anyone follows rates ATM but there seems to have been some big drops in fixed ones.

I'm currently on a 5.59% tracker and it doesn't look like the base rate will drop until after the summer. Even then it'll probably be a small decrease. So I'm now thinking about fixing the mortgage.

2 years with no fee is 4.69%

2 years with a £999 fee is 4.44%

5 years with a £999 fee is 3.89%

The above would save between £80-£150 a month depending on what I went for. Or I chance waiting a bit longer to see if they drop any more. I've already added £2k to the mortgage switching products in the last 18 months so I need to think carefully!

There's no point going for the 2 year fix with the fee as the difference a month without it is less than half the fee over a 24 months period.

The 5 year fix is tempting as that'll save the most and the extra saving would cover the fee after 14 months. But we are still planning on moving. It won't be until next year at the earliest, maybe even the year after. With the 5 year fix there would be a 5% ERC if it can't be ported, which I need to find out about. So it's either pay that ERC when we move (if we need to) and reduce our repayments now or stick with the 2 year.

I really can't see the base rate dropping below 5% this year so it doesn't make sense to stay on the tracker now.

Anyone work in banking, got any predictions! 😂

[parthiban]

My hunch is that the base rate will drop through the year as we head towards the election, so if you can afford it it might pay to stick on a tracker for a few months to see how this plays out.

I definitely wouldn't want to fix for longer than 2 years at the moment, the base rate is very unlikely to go any higher but the banks are fighting against each other for business (hence rates reducing) because no one is buying anything at all.

[Rich]

I know they'll be meeting on 1st February to discuss the base rate so I won't be doing anything until then. As you say it's unlikely to increase now inflation is much lower. I can hold out for now, I was just thinking that £80+ is better in my pocket than going on interest, especially the 2 year fix with no fee.

I probably won't do a 5 year fix but 3.89% seems very good compared to 2023. It's unlikely to drop back to what they used to be but how much lower do we think it might go. I can't see it being under 3% for a very long time.

Houses don't come up for sale that often in my area. Most extend or rebuild them so it's difficult to see if anything is selling. There's been lots of reductions in Norfolk though so that area is obviously being affected.

[adam_r]

It will be interesting how the rate fluctuating will impact people.  I am due to renew mine shortly and am wincing at the new repayment costs. I don't have a badly paid job but I do wonder how those less fortune can cope. 

Food prices are crazy high, car and house insurance is jumped up... Doesn't leave much left in the kitty at the end of the month. 

 

[parthiban]

On 19/01/2024 at 13:33, Rich said:

I probably won't do a 5 year fix but 3.89% seems very good compared to 2023. It's unlikely to drop back to what they used to be but how much lower do we think it might go. I can't see it being under 3% for a very long time.

True, 3.89% is a decent rate and it's unlikely to go back to how it was - I'd maybe wait a month to see what happens and then fix at the lowest rate available then.

I did hear that Santander have bucked the trend and are increasing rates, so it's possible this rate war won't last forever.

[Rich]

On 19/01/2024 at 19:04, adam_r said:

It will be interesting how the rate fluctuating will impact people.  I am due to renew mine shortly and am wincing at the new repayment costs. I don't have a badly paid job but I do wonder how those less fortune can cope. 

Food prices are crazy high, car and house insurance is jumped up... Doesn't leave much left in the kitty at the end of the month. 

Yeah some people are really struggling. I've been reading various posts, especially on MSE and it's eyewatering how much some mortgages are going up by.

I was fortunate that home and car insurance was renewed in September and October last year. I'm not looking forward to the renewals this year.

6 hours ago, parthiban said:

True, 3.89% is a decent rate and it's unlikely to go back to how it was - I'd maybe wait a month to see what happens and then fix at the lowest rate available then.

I did hear that Santander have bucked the trend and are increasing rates, so it's possible this rate war won't last forever.

If I had no plans to move then I would fix today at that rate for 5 years. But when we do move the ERC will wipe out all savings made from the lower rate.

It sounds like the base rate won't be dropping much this year. Even Martin Lewis on last night's show thinks it'll settle around 3% by the end of 2025. If I've remembered that right. By then our tracker would've finished.

We're actually with Santander but the increase is only minimal. It's not actually been increased on my offers yet. I will see what happens with the base rate first on 1st February before making a decision but I think I'm heading towards a 2 year fix now.

[parthiban]

On 24/01/2024 at 22:14, Rich said:

If I had no plans to move then I would fix today at that rate for 5 years. But when we do move the ERC will wipe out all savings made from the lower rate.

Sorry if I've missed it earlier but if you move are you not planning to buy another house?

[Rich]

Yes we'll be buying another house but the whole idea of moving to another area is to reduce the mortgage as well as getting a larger property. Depending on the house and area we could reduce the mortgage by quite a bit and with a 5% ERC on what we don't need could be costly. That's assuming Santander allow us to port the mortgage but it should be ok.

The base rate announcement was interesting. Out of 9 votes, 6 of them wanted it kept the same, 2 an increase and 1 a decrease. I can't see it dropping by more than 0.5% by the end of 2024 and more drops in 2025. Say it hits 3.5% towards the end of 2025 that would make our tracker the same as the 5 year fix I can get now. In that time I would've paid out hundreds/thousands more in interest. Although this would obviously decrease as the base rate drops.

The only benefit I can see for staying on the tracker now is if fixed rate deals get any cheaper but they could just as easily increase and then I'll wish I had fixed sooner!

Work has also thrown a curveball. It looks like from April all non teaching staff are getting a substantial payrise, much more than the usual 5% increase. I wouldn't be able to get a similar job in Norfolk that pays the same. The only way would be getting in to one of the universities but that could take a while waiting for the right jobs to come up. I'm keen to stay in education so have only been looking in this industry. This was only announced yesterday but I'm now thinking of staying put a little longer which makes the 5 year fix even more appealing, especially if I'm paying another £999 fee.

[parthiban]

Right that makes sense, if you'll be settling a large chunk of the balance then the ERC is relevant. However, is your ERC constant throughout the term of the deal? I'm with Halifax and I believe (although not sure now if I'm wrong!) but I think ours reduces by 1% each year, so is 5% in the first year, 4% in the second year and so on.

I can totally see the rate dropping quite considerably before the end of the year because of the upcoming election - never know what might happen but I'd be very surprised if the rate isn't a lot lower than it currently is by the time of the election (and the same will most likely happen in the US too).