Why take fixed if you can switch at any time

u0362565

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

seatbeltnoob

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

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.

originalmiscellany

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.

Thrugelmir

u0362565 wrote: »

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?

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.

u0362565

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

u0362565 wrote: »

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.

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.

getmore4less

seatbeltnoob wrote: »

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.

People were saying that for over 8 years then Aug 16 happened.

locky82

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?