Why cant I find a fixed rate at the rate I pay now ?

Michael_Rennie

Hi, I am currently with the Nationwide and pay their BMR (Base Mortgage Rate) which is 2% above the B of E rate.....so I pay 2.5% variable and am not tied in.

My payments are affordable and I would like to keep them that way, so why can't I find anything which comes remotely close ?
I have 20 yrs left to pay and the piece of mind and financial security I would get from fixing my mortgage (for life!) cannot be overstated.

The places I have looked want to charge me to go on a comparitively uncompetitive rate ! But even at 2.5% they would still make a huge profit over the term so why will nobody come anywhere remotely close ?

This is my first post - I would appreciate your knowledge / wisdom !

Thanks.

opinions4u

Michael_Rennie wrote: »

My payments are affordable and I would like to keep them that way, so why can't I find anything which comes remotely close ?
I have 20 yrs left to pay and the piece of mind and financial security I would get from fixing my mortgage (for life!) cannot be overstated.

If you want a long term fix you need to pay the going rate for a long term fix.

The places I have looked want to charge me to go on a comparitively uncompetitive rate ! But even at 2.5% they would still make a huge profit over the term so why will nobody come anywhere remotely close ?

There is not a hope in hell that they would make a profit over the term charging a fixed rate in the region of 2.5%.

Here's a couple of examples as to why not.

1) Swap rates give you an indication of how much fixed rate money costs the lender (3.38% to 4.38% for 5 to 25 year terms at the time of posting). That said, based on a lender's risk profile, the wholesale funders will add a little bit on to that. In addition, lenders have to make a profit (typically 2% top up) and in the current market, where losses on mortgages are happening every day, a prudent lender will price in an additional fraction of a percent to cover potential write-offs. Don't forget there is also a scarcity of funds from wholesale funders who provide this money to our mortgage lenders. So we no longer have lenders falling over themselves to lend money cheaply.

You will also notice that current swap rates are about the same in cost as they were 12 months ago.

2) Savings rates. Birmingham Midshires pay savers 5.1% to tie their money up for 5 years. So do you really expect a mortgage lender to lend that money on at 2.5%?

Based on a £100,000 mortgage for 25 years, I'd estimate that a typical lender would make a loss of around £75,000 if they lent you the money at a fixed 2.5%. If Tesco pay Warburtons 50p to stock a loaf of bread, you wouldn't expect them to sell it for 25p.

Enjoy your low Nationwide rate. Their savers are being shafted with awful rates so that you can do just that! But live your life as if you were paying 5% and either save the difference or pay it off your debt.

I hope that answers the question clearly and concisely for you. Welcome to MSE!