Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in, and we will get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at money@theipaper.com.
Question: My mortgage is up for renewal in December 2025 and I have five years until it is paid off. I currently have a 1.89 per cent fixed rate, and my bank is offering 4.19 per cent for a five-year fix. A broker has offered 3.69 per cent, or I could use my home line of credit at 4.95 per cent. What should I do?
Answer: You’re in a good position but facing one of those tricky timing calls that only seem obvious in hindsight.
With a fixed rate at 1.89 per cent ending in December 2025 and just five years left on the mortgage, the decision is not just about which rate to take but how to balance certainty, flexibility, and total cost over time.
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Your current lender’s 4.19 per cent offer looks high compared with your expiring rate but is competitive for a mainstream bank renewal in today’s market.
The broker’s 3.69 per cent shows there is already a clear gap between retention pricing and what can be achieved on the wider market. It highlights the value of checking your options rather than accepting the default product transfer rate being offered.
You also mentioned a home line of credit at 4.95 per cent. Without knowing whether this is a fixed or variable facility, it’s difficult to make a direct comparison.
If it’s variable, the rate could move lower over time if base rate reductions come through next year, but equally, it could remain higher for longer.
If it’s fixed, you would need to weigh the total cost against the structure and repayment flexibility it offers.
Either way, using a home line to clear your mortgage only makes sense if the rate is consistently cheaper and you have the discipline to repay it like a term loan rather than treating it as an open balance.
With the Bank of England (BoE) holding the base rate this month, the message from policymakers is one of patience rather than urgency.
Inflation continues to fall, but the BoE is waiting to see the impact of tighter fiscal policy and slower wage growth before making its next move. Financial markets still expect modest rate reductions through 2026, but most of that expectation is already priced into mortgage rates.
Two- and five-year swap rates, which underpin fixed-rate mortgage pricing, are currently around 3.5 to 3.6 per cent. That means lenders have already built in the likelihood of lower rates ahead. Waiting much longer might save a few tenths of a percent but not a full percentage point.
Since your renewal is in December, you’re already within the six-month window where you can secure a new deal. That gives you the flexibility to act now, lock in a rate, and continue monitoring the market.
If rates improve before completion, most lenders and certainly most brokers will keep you informed and whether to switch to the better deal at no cost before the new fix begins. It’s a useful safety net in a falling market.
With only five years remaining, a five-year fix offers complete certainty to the end of the mortgage.
The maths is straightforward: on a £200,000 balance, the difference between a 3.69 per cent and a 4.19 per cent rate over five years equates to roughly £5,000 to £6,000 less interest paid in total. That’s meaningful but not transformational compared with the peace of mind of knowing exactly what you’ll pay through to the finish line.
If your income and expenses are stable, locking into the lowest fixed rate you can secure through a broker is the pragmatic route. It removes volatility risk and lines up neatly with the time left on your mortgage.
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If you prefer flexibility, perhaps because you plan to make overpayments or might repay early, a shorter fix or tracker could suit you better. But avoid switching to the home line unless you’re certain about the rate type, repayment discipline, and time frame.
The key is not to chase the absolute bottom of the market. Rates have already peaked and are trending lower, but fixed deals have largely adjusted to that expectation. Focus on timing and suitability.
Review your options now, compare lender and broker rates carefully, and make a decision that fits your circumstances, not just the market noise.
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