What is wrong with fixed rate mortgages?

Legacy_user

I am looking to move and take out a new mortgage (the previous one was completed a few years ago). According to a lenders web site, I qualify for 1,2,3,4,5 year fixed rate mortgages. I cannot overpay the mortgage during the deal.

All of this seems reasonable, but I thought fixed rate mortgages were unpopular. Was I right? Why not go for something that allows you a known figure over 1 to 5 years? Interest rates can only rise.

Thanks
moneyunwise

Landofwood

What are you talking about?

ACG

Fixed rates typically cost a little more each month than a tracker rate.

I do more fixed rate mortgages than I do tracker rates.

Thrugelmir

moneyunwise wrote: »

Was I right? Why not go for something that allows you a known figure over 1 to 5 years? Interest rates can only rise.

Peoples circumstances differ. Hence the range of mortgage products available. Yes interest rates will rise. So make hay while the sun shines. Concentrate on reducing the debt owed.

marathonic

One of the things that turn me off short-term fixed-rate mortgages is fees. My mortgage is relatively low and the trend of higher-fees on mortgages might continue.

With a mortgage of £75,000, I feel that it's better to pay a fee of £500 - £1,000 to secure the lowest lifetime tracker available today. With this option, I only have to pay another fee if a better lifetime tracker becomes available and I want to move to it.

My main fear is that fee-free mortgages become all but obsolete at a time where my mortgage is so low that fees are a significant percentage of my outstanding balance.

I'm currently on a 1.79% lifetime tracker (1.29% above base rate) and will only consider paying another fee if a BOE+0.99%, or better, lifetime tracker comes along.

BJV

It is about what is best for you.


I personally find it easier to budget knowing exactly how much I will pay each month and until very recently have always had fixed rate.


But I do know people who prefer to swap and change. For them it is no hassle and long term they probably do save. But again for me I prefer the security.


It is horses for courses so go with what you feel is right for you.

Cornucopia

Fixed-rate mortgages are a hedge against rate rises - you pay a little more now in the expectation that you will save money later.

Some people want/need that, and others don't - it's not a question of fixed mortgages being universally unpopular, and they aren't.

Brock_and_Roll

Interest rates can only rise....yes absolutely.

However, as fixed rates are higher than variable rates, many people are playing a waiting game and there will be a rush to fixed rates when the first hint comes from the Bank of England that a base rate rise is on the cards or a bit of economic data is released (e.g. inflation figures) that points towards a rise in rates.

ACG

MArathonic - I am not suggesting you are wrong, but you ould look at fee free or low fee fixed rates?

Landofwood

Brock_and_Roll wrote: »

Interest rates can only rise....yes absolutely.

Plenty of numbers lower than 0.5

For example:

0.499
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0
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Cornucopia

Sometimes I really wish MSE had a "No Thanks" button.