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  • FIRST POST
    • u0362565
    • By u0362565 11th Feb 18, 7:38 PM
    • 63Posts
    • 5Thanks
    u0362565
    Why take fixed if you can switch at any time
    • #1
    • 11th Feb 18, 7:38 PM
    Why take fixed if you can switch at any time 11th Feb 18 at 7:38 PM
    Hi all,

    If variable mortgages offer better interest rates and you have the opportunity to fix at any point why would you choose a fixed rate to start with? If the BOE decides to up its rate do you have time before it comes into force to switch to a fixed deal before the lenders put their rates up?

    What this doesn't account for is lenders varying their rates over time while you're on the variable rate although its usually small changes unless the BOE rate goes up.

    Thanks
Page 1
    • seatbeltnoob
    • By seatbeltnoob 11th Feb 18, 7:42 PM
    • 343 Posts
    • 80 Thanks
    seatbeltnoob
    • #2
    • 11th Feb 18, 7:42 PM
    • #2
    • 11th Feb 18, 7:42 PM
    Well with interest rates at 0.5% it can't go any lower so you might as well fix it from the start.

    For the longest time it wasn't if, but when rates would rise up. it's pretty much a no-brainer really to lock the current rate in.

    Of course there are some rare instances where interest rates are negative. It's happened in Germany but our economists are more sensible than that and would never let it go that way.
    • ACG
    • By ACG 11th Feb 18, 8:06 PM
    • 16,320 Posts
    • 8,434 Thanks
    ACG
    • #3
    • 11th Feb 18, 8:06 PM
    • #3
    • 11th Feb 18, 8:06 PM
    Banks tend to start raising their rates at the slightest whiff of rate rises on the cards. So by the time you think you need to tie in to a fix, you have already missed the boat.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • originalmiscellany
    • By originalmiscellany 11th Feb 18, 8:10 PM
    • 1,601 Posts
    • 3,864 Thanks
    originalmiscellany
    • #4
    • 11th Feb 18, 8:10 PM
    • #4
    • 11th Feb 18, 8:10 PM
    I would agree - when interest rates go up again, the actual process of filling in the paperwork etc, even through a broker may result in you getting the "next" tier of rates as banks often pull these quickly.
    Also a mortgage offer is valid upto 6 months - so I am about to get one, but then will hold onto it for a few months before taking it - thus I continue at the good rate I have, but can lock down at a later date.
    Feb 2012 - onwards MF achieved
    September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
    February 2018 down to 28.04 months vs 30.07 months at normal payment.
    Predicted mortgage clearing 03/2047 - now looking at 07/2045

    Aims: 1) To pay off mortgage within 20 years - 2037
    • Thrugelmir
    • By Thrugelmir 11th Feb 18, 8:18 PM
    • 57,453 Posts
    • 50,745 Thanks
    Thrugelmir
    • #5
    • 11th Feb 18, 8:18 PM
    • #5
    • 11th Feb 18, 8:18 PM
    If the BOE decides to up its rate do you have time before it comes into force to switch to a fixed deal before the lenders put their rates up?
    Originally posted by u0362565
    Lending markets, not just for mortgages, will react almost immediately to any movement. When interest rates are rising fixed deals will be pulled overnight.

    Fixed rate deals change continously as there's only a finite amount of money available for each tranche offered.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • u0362565
    • By u0362565 11th Feb 18, 10:09 PM
    • 63 Posts
    • 5 Thanks
    u0362565
    • #6
    • 11th Feb 18, 10:09 PM
    • #6
    • 11th Feb 18, 10:09 PM
    OK thanks for the comments. Looks like I should keep my eyes open for a good long term fix then as not planning on going anywhere in next 5 yrs at least.
    • Thrugelmir
    • By Thrugelmir 11th Feb 18, 10:33 PM
    • 57,453 Posts
    • 50,745 Thanks
    Thrugelmir
    • #7
    • 11th Feb 18, 10:33 PM
    • #7
    • 11th Feb 18, 10:33 PM
    OK thanks for the comments. Looks like I should keep my eyes open for a good long term fix then as not planning on going anywhere in next 5 yrs at least.
    Originally posted by u0362565
    Rates are generally good thanks to supportive BOE action over the past 10 years. Longer term are only heading one way. Lock in while you can is the most appropriate course of action. As you never know when the change might occur or by how much.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • getmore4less
    • By getmore4less 11th Feb 18, 10:49 PM
    • 31,381 Posts
    • 18,806 Thanks
    getmore4less
    • #8
    • 11th Feb 18, 10:49 PM
    • #8
    • 11th Feb 18, 10:49 PM
    Well with interest rates at 0.5% it can't go any lower so you might as well fix it from the start.

    For the longest time it wasn't if, but when rates would rise up. it's pretty much a no-brainer really to lock the current rate in.

    Of course there are some rare instances where interest rates are negative. It's happened in Germany but our economists are more sensible than that and would never let it go that way.
    Originally posted by seatbeltnoob
    People were saying that for over 8 years then Aug 16 happened.
    • locky82
    • By locky82 11th Feb 18, 11:08 PM
    • 8 Posts
    • 0 Thanks
    locky82
    • #9
    • 11th Feb 18, 11:08 PM
    • #9
    • 11th Feb 18, 11:08 PM
    I!!!8217;m a tracker and would rather stay that way so I don!!!8217;t believe a word Carney says. I am wondering though would it be a good idea to get a mortgage offer on a 5/10 year fix as they generally last 6 months and pull the trigger if rates do raise and/or let the offer expire if they dont! Will this work or will the offer be pulled with rate rises?
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