Mortgage holders told whether to fix their deal or stay on tracker

Mortgage experts have moved to explain if you should lock into fixed deal or move to a tracker. The current average mortgage rate for a five-year fixed rate mortgage is 4.80 per cent, up from 4.72 per cent last week. The current average rate for a two-year fixed rate mortgage is 5.15 per cent, up from 5.08 per cent last week.

The lowest available five-year fixed rate is 4.09 per cent, and the lowest available two-year fixed rate is 4.38 per cent. MoneySavingExpert says: “There’s no right answer to how long you should fix for – as so much depends on your own financial circumstances – it’s not all about rate.

“The less spare cash you have to meet rate rises and the more you value budgeting certainty, the more you might hedge towards fixing, and fixing longer. But while a lengthier fix can give you certainty, do remember that if you need to leave the mortgage during the term of the fix, you could face an early repayment charge if you can’t take it with you.”

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Mark Harris, chief executive of mortgage broker SPF Private Clients said: “If I were taking out a mortgage this year and my budget was tight, I would opt for a five-year fix, as it’s better to be safe than sorry. That would enable me to budget for a reasonable period of time.”

“There are several lenders who, on a residential basis will give you more borrowing on a five year than on a two year deal,” says Chris Sykes of broker, Private Finance. “This is because of better rates on a five-year deals, and the longer term nature allowing lenders to stress test at a lower percentage, as there is greater longer term certainty with the loans.”

Lewis Shaw, Owner and Mortgage ExpertatShaw Financial Services said: “A fixed rate may be appropriate if you’re a cautious person who doesn’t want to take the risk of fluctuating mortgage payments. Conversely, if you’re happy to take the risk that your mortgage payments can change for better or worse, a tracker may be suitable.

“The reality is there is no one size fits all. What you should do is talk to a good quality advisor who can determine your circumstances, plans, and end goals. Only then can an appropriate recommendation be made that’s specific to you and you alone.”