Long term Fixed Rates

steve700

Stroud and Swindon are offering 15 year 5.15% fixed-rate mortgages....

http://www.ssbsmortgage.co.uk/ssbs/

ReportInvestor

Very good.

Barry Riley in the December edition of Money Observer was arguing that people should be switching from SLAMing (Saving long and mortgaging short) to BLADSing (borrowing long and depositing short).

He suggests that the big investment institutions, especially pension funds, have driven down long bond yields to below realistic rates. And the rest of us should take advantage.

Not good news for brokers, if the message gets through, though.

Conrad

The downside from borrowers perspective concerns changes to personal circumstances.
Its difficult to know what surprises life has in store for us so to tie yourself into a large early repayment fee for so long might be a little reckless.

I would say up to 50% of my clients are buying following a divorce, sometimes quite late in life and that not one of them expected this outcome, so to expect people to make such a long term mortgage commitment is asking for trouble.

Of course there might be a few people for whom a long term fixed rate is ideal but I for one would not feel very comfortable making such a recommendation. 5 years is enough I think.

Its worth noting that recently tens of thousands of Civil Servants have been made redunadant. I expect if you asked them 5 years ago whether this was possible most would have thought not.

Other issues could be:

Illness
Accident
Childrens School performance declining
Unforssen move to follow family members (due to them being ill or needing help)
Changes in local enviroment - rising crime etc.

NOW BEFORE SOMEONE SAYS "BUT THESE MORTGAGES ARE PORTABLE", this misses a fundamental point: Lenders criteria may not match with the persons future circumstances (eg 1 income later where formely there were 2).

ReportInvestor

Valid comments, all.

The uncertainties of modern life, especially relationship breakdown & job insecurity , certainly play into the hands of the brokers.

Which is not to suggest that the brokers are doing anything other than a decent job.

boltonangel

certain lenders offer 'windows' that you can use to come out of the product penalty free - obviously these may not tie in with personal circumstances, but are worth bearing in mind.