Remortgaging - what would you do?

[meriad]

My mortgage is up for renewal and I'm really torn between going for a 5 year fixed @2.64% or a 10 year fixed rate @ 2.74%

It really is so hard to know what interest rates will do.

So just being curious what you'd be inclined to do (and no I won't hold you responsible )

[cruiser2]

I would go for the ten year mortgage. You will not have to worry what happens to interest rates for the next ten years.
It will be a fixed amount which will not alter and will help with your budgeting.

I have been lucky as I have worked for insurance companies and got a reduced interest rate when i had a mortgage.
At one time the mortgage interest rate was 12%. Imagine what would happen if it went up to that now.

[cromwell]

I agree with Cruiser.

[TheOstrich]

Nobody can forecast anything with any certainty at the moment, the way things are.

If you're looking at savings rates, which are starting to rise a bit now, it possibly makes sense not to fix your investment for too long a period.

But in your case, Meriad, with mortgage rates, I'd be looking at the 10 year fix as Cruiser and Cromwell have said, for the certainty of that 2.74% - as long as you can afford it and you can see your income set fair for that length of time.

[Workingman]

I suppose it also depends on how long is left on the mortgage.

If the ten year job goes to the end, or nearly to the end it is only 0.1% more than the five year job for the first five years - 60 payments at an extra 0.1% is less than a few £ per month - if that.

The new fixed rate in five years could be anything - two or three times today's offer. If it is lower, a big "if", it will not be by much so again only pennies per week.

I would go long.

[meriad]

thanks all - email sent and hopefully get the ball rolling for the 10year one (which is what I was leaning towards, so good to have my thoughts confirmed)

much appreciated x

[Suff]

A bit late on this one but when thinking about this it's good to look back over your shoulder. When inflation was running lower than it is today, we had mortgage rates over 5%. The BOE is saying they will use interest rates to remove inflation from the economy. However that inflation is not mainly driven by our economy. So a series of 0.25% rises are on the cards for quite some time. BOE rates are likely to be at or close to 2% by the year end. At 2% it's unlikely mortgages will be 2.75%. At the very least 1.5%, because although there are 4 meetings left this year there are only two with inflation reports.

Then looking forward to the long term, once the BOE has finished raising rates, possibly as high as 4%, or more, they won't want to lower them any time soon.

Just in case they try to talk you into a shorter deal. After all it is not in the bank's interest for you to take a long term mortgage, at lower rates, right now.