5 year fixed rate advisable

[lola1979]

just wondering in the current climate if a 5 year fixed rate mortgage is advisable - we'd actually be paying more than we are at the moment on a variable rate - questionis will teh rates come down in the next few years?

thanks in advance

 

[NorfBank]

Nobody knows, don't fix just to read the market.
If you can afford to stay on a tracker then do so, in the long run they have been proven to be the best value.
If for some reason you need to redeem your mortgage in the 5 year fixed period you may be hit with penalties that will be greater than any savings you may make by fixing.

 

[marksa]

in the long run they have been proven to be the best value.

This is a matter of timing. Anyone for example who fixed their mortgage in the last 2 years is a very happy camper. e.g. I fixed March 2006 for 5 years at 3.80% Current ECB is 3.75+minimum margin with NIB gives a rate of 4.25%.

Fixed rates follow the anticipated path of short term rates such as ECB, so it depends how many hikes the market is anticipating. At the moment it is factoring in 3 more (4.50% for 2 - 5 years market rate). I think that if ECB got to 4.50% it would be the top end of their cycle, and may well take 6-9 months to get there. On that basis I think it would not be worthwile fixing for 5 years at this stage - from a "pricing" perspective. Obviously the comments around flexibility and affordability still apply.

 

[ClubMan]

Lots of existing threads on the general "fixed versus variable/tracker" and "[when] should I fix and for how long" issues.