Fixed Rate to Variable Rate Question

drynetnick

I'm just over 1 year into a 2 year fixed rate mortgage with Nationwide, then I'll go into a standard variable rate.

Since we booked the mortgage, interest rates have fallen by about 0.75%.

Just to make things simple, say our variable rate was booked at 6.5%

What I would like to know is - Is the variable rate affected by a decrease in interest rates WHILST I'm in my fixed rate? Or is it only affected after 2 years, once I'm out of the fixed rate?

So, hypothetically - Does my variable rate currently stand at 5.75% or still at 6.5%?

Thanks in advance.

Galaxy863

Just had a quick look on the nationwide site and from what I can see the current SVR is 6.49%.

Once your fixed rate is up you will move onto their current SVR, so it could change from 6.49%

Either way the current SVR won't affect you until your fixed rate ends, and no-one will be able to tell you what the current SVR will be when that happens

Sorry!

BillTrac

drynetnick, surely the variable rate is exactly what is says on the tin? I don't think you can book a variable rate,especially not a year in advance.

Variable I thought means whatever rate the BS are setting at the time, and it can go up or down.

We have just agreed another 5-year fixed with NW at 5.79. The variable I think is 6.89. I see the BOE has kept interest rates at 5% so I don't think this will drop for a while.

So I think your variable rate will be the going rate at the time your fixed rate finishes.

Bill

beecher

As others have said, you didn't book a variable rate - your Mortgage details would just give you an idea of what your payments would be if the SVR remained the same. In one year who knows where the SVR will be - might be higher or lower. You might also want to find out if the Nationwide has their own SVR or if it tracks the BoE rate.,

Locoblade

To put it a slightly different way, look at the SVR as the mortgage lender's standard offering which will vary over time, and any time limited fixed/discount rates as special offers to lure you into buying the product. As an analogy, Sky TV might offer Sky Sports at £5 a month for the first 6 months before the montly payment reverts to their regular monthly fee, but if after 3 months the regular fee goes up, at the end of the 6 months you'll pay the new monthly charge thats just risen, not the cheaper one that was current when you signed up.

sarkin

Fixed rates are fixed that is why they call them fixed rates, rates that move up and down are called variable, tacker or discount.