Mortgage - Fixed or Tracker - Poll

Over the next 5 years will a fixed or tracker mortgage be the best value?

  • Fixed

    Votes: 19 55.9%
  • Tracker

    Votes: 15 44.1%

  • Total voters
    34
  • Poll closed .
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wemorgan

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Is anyone in possession of a working crystal ball?

I hope to move house this summer. The $64k question is; should I take a fixed or tracker mortgage?

Just for example, looking at NatWest mortgages:

2yr fixed - 3.39%
5yr fixed - 5.49%
2yr tracker - 2.59%

(I know there are better value products out there, but just using this as an example)

Mortgage will be 50% of house value and repayments affordable for as long as I am employed, even if rates double.

So the question is not so much about affordability but best value over the next 5yrs.

Anyone with a view with how interest rates will change over this period?

My gut feeling is to go tracker, but am I being naive?

Thanks for any thoughts.
 
Wait until after the election (!)

Might give some hints?
 
Is anyone in possession of a working crystal ball?

I hope to move house this summer. The $64k question is; should I take a fixed or tracker mortgage?

Just for example, looking at NatWest mortgages:

2yr fixed - 3.39%
5yr fixed - 5.49%
2yr tracker - 2.59%

(I know there are better value products out there, but just using this as an example)

Mortgage will be 50% of house value and repayments affordable for as long as I am employed, even if rates double.

So the question is not so much about affordability but best value over the next 5yrs.

Anyone with a view with how interest rates will change over this period?

My gut feeling is to go tracker, but am I being naive?

Thanks for any thoughts.

With a 50% deposit you should be able to get much much better rates. Something around 1.9%. You might even be able to fix for the term at around 3%. But these will be hard to find offerings but fantastic value of you get them.

My preference (but then again I dont have a mortgage anymore) would be to fix it at the lowest possible rate for the whole term. No nasty suprises - ever.
 
A few basic thoughts.

All governments promise to reduce borrowing. How many have succeeded?

If government borrowing increases, so do interest rates.

Do you think government borrowing will increase or decrease in the medium term?
 
With a 50% deposit you should be able to get much much better rates. Something around 1.9%. You might even be able to fix for the term at around 3%. But these will be hard to find offerings but fantastic value of you get them.

My preference (but then again I dont have a mortgage anymore) would be to fix it at the lowest possible rate for the whole term. No nasty suprises - ever.

A nice idea :) I had a quick look and most 10yr fixed mortgages are 5.5%. This adds about £10k over the term of the mortgage vs. a current 2yr fixed rate deal (at today's rates). But I agree the certainty is a nice concept, but as is £10k in my pocket. Decision decisions.
 
Use a broker, preferably one that doesn't charge a fee.

They should know the market well enough.

Just be careful as some lenders offer keener deals for direct applicants.

For comparison also take fees into account.

Why not consider a tracker with no redemption penalties and dwap to fix if rates look more like going up.
 
Whats the point of taking out a tracker with interest rates as low as they can go at the moment? A tracker is designed to track at a few percent above the Bank of Englands base rate so it will only go up and so will your mortgage.

Fixed rate is the way to go IMHO.:)
 
[email protected]% seems extortionate TBH. I'd go with the 2yr tracker and enjoy the low rate, overpaying to bring down the term if possible.

I'm on 6.9% fixed which ends in June, looking forward to going onto variable rate at 3.94%, will save (overpaying) £££s. Can't get a new deal as LTV too high!
 
currently the 2 yr tracker is looking nice as the rates are low, they can only now go up as they have been low for a long time, but im sure you can get a fixed rate around 3-4% that would be my choice.
 
currently the 2 yr tracker is looking nice as the rates are low, they can only now go up as they have been low for a long time, but im sure you can get a fixed rate around 3-4% that would be my choice.

Exactly, if you had a tracker before the rates went down then great, but total waste of time if your thinking about taking one out now...
 
Exactly, if you had a tracker before the rates went down then great, but total waste of time if your thinking about taking one out now...

The way I would see a tracker working today is if interest rates stay low or only increased 1% over the 2 yr mortgage period. As the total interest charges would be lower than fixing at a higher rate.

But I take your point, in all probability interest rates are more likely to rise than fall in the future.

Now a 10yr fixed at 4% with no charge for overpayments would be nice :)
Time to speak to a IFA I think.
 
Market consensus appears to be LIBOR at 1.75-2.00% after 12 months, and 3%+ after 5 years. After that, who knows. If the government (whatever colour) doesn't get a VERY firm grip on public finances, then who knows.

Personally, I came off a low 2 year fixed deal in September 08 and have been enjoying extremely low standard variable rates since. Could have taken some very low rate fixes but wanted to keep maximum flexibility to repay. With a few capital injections and some mega overpayments, my strategy is to do away with the mortgage altogether before rates start to rise....should just about make it.
 
I would not try and second guess the market - why gamble.

Just get a mtg that tracks bank base rate by the lowest margin and with no minimum cap if you can find one (not one that tracks the lender's standard variable rate which can be vastly different).

According to governer of BoE this past week, he feels interest rates will stay low for many years.

I have been using this principle and I have beeen enjoying a mortgage rate of just 1% over bank rate for life, so paying just 1.5% presently.
 
Wait until after the election (!)

Might give some hints?

Definately agree on that, as mines up for a renewal end of the month.
 
Wait until after the election (!)

Might give some hints?

Definately agree on that, as mines up for a renewal end of the month.

Only a few hours remaining now. So I'd be doing well to find a house, arrange a mortgage and complete within 1 day :D

It will be interesting to see how things pan out over the next few months. Greece is a sombre lesson. But I digress. :)
 
The way I see it, Interest rates can only go in one direction from where we are now. So if you find a good deal, lock it up.
 
Given todays developments, interest rates are going to go up. If it were me, I would fix right now.
 
The fixed rates will already factor in what the 'market' expects to happen during the term of the fixed rate, so it doesn't necessarily follow that you can bag a bargain fixed rate deal when the base rate is low.

In fact given the current economic conditions forecasting in the medium term will be difficult even for the market to anticipate. I think it's fair that the next couple of years interest rates will continue to be relatively low. In 10 or maybe 15 years rates will probably have increased considerably compared to day. In the meantime who knows!!

Like many I want the product that offers me a low rate and therefore smallest reapyment, but I personally would be prepared to pay a small premium for flexibility. Some fixed rate deals can be very restrictive and costly to buy yourself out of.
 
This is just my opinion, but I would definately go for the comfort of fixed. I am quite pessimistic about the global picture atm and think we are on the verge of a financial maelstrom that makes the last 2 years look tame. What is currently happening to Greece, can spread to UK, and if the Bond market decides to push rates up, it will be savage.

There are no certainties of course, we don't know how disciplined our next government will be and how well received it will be in the markets, but the massive amount of Debt that the banks / Government have on the books is not going away any time soon, and it needs to be financed. The money printing / cheap rates antics of the last two years have only postponed the problem, not solved it.

Sory to be such a doom-monger, maybe I spend too much time on the FT website these days.
 

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