Fix your mortgage now?

Mortgage advice should be individual to the borrower and their situation, not a time to play 'rate roulette' with your home, attempting to guess the outcome of mortgage rates over the coming months and years.

Where fixing your mortgage is the right choice, as before, taking advantage of an early product up to 6 months in advance gives the borrower some comfort, and as rates hopefully improve during that time, as brokers we can look to take those better deals. This also protects against a quick deterioration of market conditions that could push rates up quickly.

For those prepared to gamble, look at the effect of any fees payable on a mortgage deal. While rates may improve in the short term when you come to remortgage again shortly, those extra fees may outweigh the benefits, so speak to a good mortgage broker to look at your situation.

Not one cap fits all I'm afraid. Client's circumstances, aims and risk appetite should dictate the advice and recommendation from any broker and should be tailored accordingly in a rising or decreasing interest rate market. One thing is for certain is uncertainty - for consumers whose deals are expiring in 6m, dealing with a good broker, can lock a deal in now, and if a more favourable deal presents itself, look to switch to benefit the client, which lenders won't offer direct to client.

With rates tumbling, the market heating up and rates changing almost daily, anyone coming to the end of a fixed-rate deal imminently should consider the wider market rather than just accepting what their lenders offer by way of a new product. The choice between 2-year and 5-year fixed rates is helped by a couple of factors. Firstly, 5-year pricing is currently lower than 2-year, and the less frequently you remortgage, the lower the overall associated costs usually are. Tracker rates, particularly ones with no Early Repayment Charges, could be a good option with the prospect of base rate reduction sooner rather than later. For those with rates expiring 6 months from now, secure something now and re-assess close to the expiry date. They have the best of both worlds, securing a rate now and switching later if favourable. As always, using a broker is the easiest way to do this, and they will also advise the best product based on your situation, so find a good one.

The best advice around whether to fix or for how long is specific to the client's situation, plans and attitude to risk. Whilst we expect rates to reduce, it is best to secure a rate and then have the option to switch it to a better one before completion, as there is nothing to lose usually by doing that. So it is smart for borrowers to hedge their bets.

It depends on each client's circumstances so no fixing isn't the obvious choice for everyone. If you're on a budget and need to know what your monthly payments are going to be and have no plans to move then yes you may want to fix - but for how long? What if rates reduce further? On the other hand, if you have disposable income then there may be other options open to you to take advantage of falling rates albeit with the risk that the situation could turn. At times like this, it may seem the obvious choice, but now more than ever people should shop around and get advice on their options. I would certainly not suggest anyone just go with their current lender product transfer rate, as advisers, we'll assess each of our client's circumstances provide them with options and explain the impact of each one.

If the last 18 months have taught us anything, it is reviewing your mortgage at the earliest opportunity has never been so important. With the drastic changes in rates that we have seen, reviewing your mortgage six months before the end of your deal gives you a worst-case scenario and keeping it under review has proved to be the best tactic to take. This is something that we have done and continue to do to great effect, when rates fell last year we were able to save a client the best part of £32,000 throughout their 5-year fixed rate by constantly reviewing the rates available to them.

As always what product a client should choose is down to their circumstances and situation. There is no one-size-fits-all solution. Without a doubt though, even though rates are currently dropping and it looks set to continue clients should still look at their options early to give themselves the best chance of getting the mortgage that they want. Six months is the ideal time, but certainly no less than 3 months. The UK economy is still fragile and SWAP rates can just as quickly go up as they have come down and this could have an impact on the rates available to clients. Arranging your mortgage early will always be the worst-case scenario, and as they say, things can only get better.

The driving force behind any recommendation should be your short, medium and longer-term plans, not the available rate you see dazzling your eyes.
If you try to time going onto a fixed deal from something like a tracker, the chances are you will not time it right and then end up with a worse deal. For example, if you are happily watching tracker rates drop, which will eventually happen a bit, only to want to switch to a fixed rate, chances are the rate you will be jumping onto will be higher than the tracker deal you have been enjoying. This would usually mean you choose to stay on a tracker and not fix. You would be playing a game of chicken with the bank base rate, wondering when it's going to turn back and start increasing again. By the time you feel confident to fix your rate, the rates available at that time would have already increased. Put your big pants on and make a decision based on your future plans, not what next doors cat has done.

Despite rates falling and lenders already committed to a price war, you’d be crazy to lock in to a fixed rate now. Rates will continue falling throughout 2024 so the longer you can hold off the better if it’s a fixed you’re looking for. Variable rates might seem a little expensive now, but that’s because you’ll benefit as the base rate tumbles.

A buyer or homeowner's decision to fix their mortgage should not be based on blanket advice given from self-proclaimed, unqualified and unregulated property specialists that keep popping up on social media quicker than acne on a teenager working at a fast food restaurant. I still believe we have more to see and strongly anticipate reductions in the BOE base rate between March & May this year, therefore, I feel a tracker with no penalty is perfect for me. I believe too many people will fall foul of high exit penalties due to panic fixing earlier in the year. My advice to all people seeking a mortgage, stay clear of rogue Facebook and tik-tok pages that are littered with people who are not answerable to anybody for their opinion, also stay clear of social media marketing schemes where it appear too good to be true, these are mainly posted by marketers who have no financial qualifications and are trying to generate leads for relatively new or inexperienced broker. Use a reputable broker!