thread for us fixers so many ??????

Aylesbury_Duck

Steve_79_P said:

"It seems to me that many who fixed expect to have their cake and eat it.  Isn't it similar to taking insurance or fixing a mortgage?  You pay a premium to protect against something that might happen.  If the thing doesn't happen you might argue your money was "wasted", but would you have been comfortable not fixing? "

Market forces haven't changed the rates. Without intervention rates would be as per OFGEM sept cap and only going one way. Essentially rates will STILL be this high but the government backed loans will cover the difference. 

In the mortgage example, it's akin to me fixing at say 4% when I could take a variable rate at 2%. Fixed mortgage rates are usually lower than the SVR, the only time they aren't is when it is strongly suspected that rates will rise, so we know a rise is coming.....

So sometime afterwards, the (variable) rates are due to RISE to 8%. BUT the gov steps in cos people won't be able to pay and the banks will go bust, and people will lose their homes. So they pay the banks 5% of the interest (as a loan out of general taxation) and the customers only have to PAY 3%.. The interest rate is STILL 8%. The bank still gets 8%. 

Meanwhile the guy who is on the fixed rate pays more than those who are "paying" 8%, gets no help from the gov, the bank makes less money off him, and still has to shoulder some of the debt which will accrue helping everyone else but him.

Fixers would happily bite the bullet if market forces changed the rates. It's a risk we know. They also wouldn't mind paying a bit more for security, knowing they can afford the bills.

The rates have not gone down, the gov have only chosen to help some people whilst claiming to help all.

Great post, well constructed, explained and argued, thank you.  I can see the flaw in my mortgage analogy.

I'm not convinced by the bolded part, though.  As I see it, the rumoured government intervention is part of market forces.  We're already well into the era of government intervention, with price caps being in place for a while now, and the rebates and other support measures having been in place for while, too.  At what point do these things become market forces, because we're well past being in a "pure" commercial market.  It's in those circumstances that many have fixed, knowing full well that government has already intervened substantially, and may do so again.  That's the risk they took.  I have greater sympathy with those that fixed a long time ago, before substantial government intervention occurred,  I can see why they feel they've lost out if the suspected intervention is realised.

[Deleted User]

The argument appears to have devolved into:

OFGEM price cap - ok, no problem, price caps are nice but I might still fix

Government price cap - OMG, catastrophe, let me out, total bias, everyone hates 

ariarnia

Steve_79_P said:

"It seems to me that many who fixed expect to have their cake and eat it.  Isn't it similar to taking insurance or fixing a mortgage?  You pay a premium to protect against something that might happen.  If the thing doesn't happen you might argue your money was "wasted", but would you have been comfortable not fixing? "

Market forces haven't changed the rates. Without intervention rates would be as per OFGEM sept cap and only going one way. Essentially rates will STILL be this high but the government backed loans will cover the difference. 

In the mortgage example, it's akin to me fixing at say 4% when I could take a variable rate at 2%. Fixed mortgage rates are usually lower than the SVR, the only time they aren't is when it is strongly suspected that rates will rise, so we know a rise is coming.....

So sometime afterwards, the (variable) rates are due to RISE to 8%. BUT the gov steps in cos people won't be able to pay and the banks will go bust, and people will lose their homes. So they pay the banks 5% of the interest (as a loan out of general taxation) and the customers only have to PAY 3%.. The interest rate is STILL 8%. The bank still gets 8%. 

Meanwhile the guy who is on the fixed rate pays more than those who are "paying" 8%, gets no help from the gov, the bank makes less money off him, and still has to shoulder some of the debt which will accrue helping everyone else but him.

Fixers would happily bite the bullet if market forces changed the rates. It's a risk we know. They also wouldn't mind paying a bit more for security, knowing they can afford the bills.

The rates have not gone down, the gov have only chosen to help some people whilst claiming to help all.

that's actually what we think is happening to us. we remortgaged recently at a higher rate for three years and paid a smallish early redemption charge to be able to do so. that's because we looked at the way things were going and the stories of inflation at 15% next year and thought that fixing now for higher would be better than waiting for the bank of england to put the interest rates up even higher when we could fix without paying the fee. now with the government intervention int he energy market there's a good chance inflation won't get anywhere near that high and that interest rates will stay lower than we thought. meaning we will be paying over the odds. is that something we're happy about... no of course not. but do we think it's 'unfair' or that we should be allowed to go back to our old rate and have our fee returned? no. if course not. that would be silly.  

Steve_79_P

"I'm not convinced by the bolded part, though.  As I see it, the rumoured government intervention is part of market forces.  We're already well into the era of government intervention, with price caps being in place for a while now, and the rebates and other support measures having been in place for while, too.  At what point do these things become market forces, because we're well past being in a "pure" commercial market.  It's in those circumstances that many have fixed, knowing full well that government has already intervened substantially, and may do so again.  That's the risk they took.  I have greater sympathy with those that fixed a long time ago, before substantial government intervention occurred,  I can see why they feel they've lost out if the suspected intervention is realised."

Thank you, and you make a fair point. I think what I was trying to say was that the degree of risk (lose / win) when fixing at say 50p kWh was probably at best -10p / +30p depending on what the outlook was at the time of the fix and which predictions were considered. The only major pitfalls were paying more initially (at a time of year when usage is at its lowest) and a speedy recovery / Ukraine resolution. Fixers accepted this COULD be a possibility, and factored this in to the exit fees etc (as did the suppliers)

Yes it's likely that more gov help would be required if things spiralled (as they did) but it would have been very difficult to envisage the amount of help being muted bringing the rates from September onwards WAY below the predictions which were bounded for the October cap back when the £400 was introduced.

IF the £2500 cap happens, it means any fix above around 35p is a loss, considering the more recent fixes at 70p plus and THE ACTUAL October cap of 50p+ it's not unreasonable to call this a situation that could not have been modelled or foreseen.

phillw

Steve_79_P said:

Fixers would happily bite the bullet if market forces changed the rates. It's a risk we know. They also wouldn't mind paying a bit more for security, knowing they can afford the bills.

First of all, I'm pretty sure that Liz isn't reading this thread. So as long as you realize that you're just trying to convince some people who can't actually change anything, first of all we don't know what they are planning on doing for you.

Second, you willingly took out a fixed rate contract thinking that you would have a benefit that others could not benefit from. It was only a matter of time that the government was going to step in.

Why else do you think that all the energy providers have been introducing penalties for exiting a fixed rate. The last time I fixed with an exit penalty, the prices dropped soon after. I didn't moan about it.

phillw

Steve_79_P said:

it's not unreasonable to call this a situation that could not have been modelled or foreseen.

It's never possible to foresee all circumstances, though I think it was pretty obvious that the government was going to do something. I think Boris checking out months ago has delayed this decision a lot, which has probably spooked some people into making a decision that in hindsight was probably a bad idea.

Steve_79_P

phillw said:

Steve_79_P said:

Fixers would happily bite the bullet if market forces changed the rates. It's a risk we know. They also wouldn't mind paying a bit more for security, knowing they can afford the bills.

First of all, I'm pretty sure that Liz isn't reading this thread. So as long as you realize that you're just trying to convince some people who can't actually change anything, first of all we don't know what they are planning on doing for you.

Second, you willingly took out a fixed rate contract thinking that you would have a benefit that others could not benefit from. It was only a matter of time that the government was going to step in.

Why else do you think that all the energy providers have been introducing penalties for exiting a fixed rate. The last time I fixed with an exit penalty, the prices dropped soon after. I didn't moan about it.

All I'm trying to do is show that the mortgage rates analogy is flawed. I am not moaning about it.

My gas fix is at 8.24pkwh til march 24 and my electric is 35.9 (but with zero exit fees) so it makes precious little difference to me what the gov does. 

I took a fixed rate contract to give me a ceiling on the price I would have to pay, not so I had a benefit others didn't. I still hoped for options to pay less 

I don't want anyone to be unable to afford their energy bills whether fixed or otherwise. I haven't once called out anyone who did not fix. 

There will not be a solution that is fair to everyone, and good is not the enemy of perfect. We need to stop calling others out for the decisions they made, and try and make sure the most vulnerable get the most help 

Steve_79_P

Some of these will have been frightened into fixing recently, at the worst rates

sienew

Aylesbury_Duck said:

Steve_79_P said:

"It seems to me that many who fixed expect to have their cake and eat it.  Isn't it similar to taking insurance or fixing a mortgage?  You pay a premium to protect against something that might happen.  If the thing doesn't happen you might argue your money was "wasted", but would you have been comfortable not fixing? "

Market forces haven't changed the rates. Without intervention rates would be as per OFGEM sept cap and only going one way. Essentially rates will STILL be this high but the government backed loans will cover the difference. 

In the mortgage example, it's akin to me fixing at say 4% when I could take a variable rate at 2%. Fixed mortgage rates are usually lower than the SVR, the only time they aren't is when it is strongly suspected that rates will rise, so we know a rise is coming.....

So sometime afterwards, the (variable) rates are due to RISE to 8%. BUT the gov steps in cos people won't be able to pay and the banks will go bust, and people will lose their homes. So they pay the banks 5% of the interest (as a loan out of general taxation) and the customers only have to PAY 3%.. The interest rate is STILL 8%. The bank still gets 8%. 

Meanwhile the guy who is on the fixed rate pays more than those who are "paying" 8%, gets no help from the gov, the bank makes less money off him, and still has to shoulder some of the debt which will accrue helping everyone else but him.

Fixers would happily bite the bullet if market forces changed the rates. It's a risk we know. They also wouldn't mind paying a bit more for security, knowing they can afford the bills.

The rates have not gone down, the gov have only chosen to help some people whilst claiming to help all.

Great post, well constructed, explained and argued, thank you.  I can see the flaw in my mortgage analogy.

I'm not convinced by the bolded part, though.  As I see it, the rumoured government intervention is part of market forces.  We're already well into the era of government intervention, with price caps being in place for a while now, and the rebates and other support measures having been in place for while, too.  At what point do these things become market forces, because we're well past being in a "pure" commercial market.  It's in those circumstances that many have fixed, knowing full well that government has already intervened substantially, and may do so again.  That's the risk they took.  I have greater sympathy with those that fixed a long time ago, before substantial government intervention occurred,  I can see why they feel they've lost out if the suspected intervention is realised.

To be fair though, both leadership candidates (one who is now the PM) specifically ruled out almost the exact proposal that is now about to be announced.

Although maybe politicians lying is a market force that never really changes. It certainly shouldn't be though.

pickapennyup

well let's see what tomorrow brings
im away tomorrow ro Dartmouth Navel college (poud mummy) for a few days so will pop in and out of this thread and lets see what the state of play is