I would think of it this way
Both rates will be based off actual forward market rates from traded money market instruments, plus a margin for the mortgage company. The margin is determined by competition in the mortgage market (and you should shop around as you are), and the forward rates are the market consensus view of all relevant investors on expected rates over both time horizons. In that sense, either deal is a "fair bet" based on what "the market" knows today. Nobody really knows better what will come tomorrow, or next year, or beyond, although lots of people will have a view.
In practice you WILL either win or lose in outturn, as with perfect hindsight you will be able to see whether you would have paid more or less overall if you had fixed for 2 or 5. But right now, there is no "bad choice" in taking either given the above.
For me, it then comes down to a life choice about whether you like certainty, or like to leave things a bit more open and live with the consequences (either way). Personally, I would fix for 5 and not have to think about it, but that's me and my risk averse preference set. I don't know whether that would be right for you. But maybe thinking about it this way helps.
Posted By: Under soil heating on February 2nd 2023 at 14:12:48
Message Thread
- Wrath Knowledge bank - Remortgaging, go for 2 years at more or 5yr a bit less (General Chat) - megson, Feb 2, 10:29:07
- Only a fool predicts the future (General Chat) - paulg, Feb 2, 13:59:24
- Mortgage brokers (General Chat) - Eric Morecambe, Feb 2, 13:40:31
- Determining factor for me was uncertainty in 2yrs (General Chat) - CWC, Feb 2, 13:05:12
- Best advice I can give (General Chat) - seminated_woolly, Feb 2, 12:30:07
- It's a forum for fans (General Chat) - norwaay, Feb 2, 13:02:56
- I'm sorry but, as football fans, we know (General Chat) - jamesward, Feb 2, 13:39:21
- None of us seem to know anything about football either (n/m) (General Chat) - Adster, Feb 2, 13:42:23
- True, we're all imbeciles (n/m) (General Chat) - jamesward, Feb 2, 13:44:38
- None of us seem to know anything about football either (n/m) (General Chat) - Adster, Feb 2, 13:42:23
- I'm sorry but, as football fans, we know (General Chat) - jamesward, Feb 2, 13:39:21
- It's a forum for fans (General Chat) - norwaay, Feb 2, 13:02:56
- Pay it off, job done (n/m) (General Chat) - CB41, Feb 2, 12:11:04
- There’s a lot of unknowns over the next 5 years, principally a Labour government and (General Chat) - Old Git, Feb 2, 11:33:07
- From what I’ve read mortgage rates will drop (General Chat) - SCC 28, Feb 2, 10:40:37
- We got offered 4.73 on 2 years 4.14% on 5, according to the Broker I checked these with (General Chat) - megson, Feb 2, 10:50:58
- The 5 year rate demonstrates that the banks expect long term falls (General Chat) - SimonOTBC, Feb 2, 11:06:17
- The other way of looking at it.... (General Chat) - SimonOTBC, Feb 2, 11:12:34
- Thanks both of you, interesting thoughts. You are right it basically comes down (General Chat) - megson, Feb 2, 11:17:13
- I would think of it this way (General Chat) - Under soil heating, Feb 2, 14:12:48
- Just toss a coin that way it’s destiny (n/m) (General Chat) - SCC 28, Feb 2, 14:25:06
- I think I'd go 2 years..... (General Chat) - SimonOTBC, Feb 2, 11:21:36
- I would think of it this way (General Chat) - Under soil heating, Feb 2, 14:12:48
- Thanks both of you, interesting thoughts. You are right it basically comes down (General Chat) - megson, Feb 2, 11:17:13
- The other way of looking at it.... (General Chat) - SimonOTBC, Feb 2, 11:12:34
- That’s pretty good (General Chat) - SCC 28, Feb 2, 11:00:53
- The 5 year rate demonstrates that the banks expect long term falls (General Chat) - SimonOTBC, Feb 2, 11:06:17
- We got offered 4.73 on 2 years 4.14% on 5, according to the Broker I checked these with (General Chat) - megson, Feb 2, 10:50:58
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