Mortgages - time for renewal?

Gorgeous_George

Why do we have such a ridiculous mortgage system?

Time and time again I read 'We need to renew our mortgage' or 'My deal runs out in a few months' time'.

When you buy a house, the mortgage is usually expected to take 25 years to repay, yet we seem programmed to believe we shoud take a '2-year fix' or '3 year tracker'. It's madness.

Why don't we just take a 'life of mortgage' deal and stick with it?

Any perceived savings are small and the money sucked out of the system by the remortgage industry has to be recovered one way or another.

I have a lifetime off-set tracker. It is set at Bank of England base rate +0.74%. A more sensible anchor would be the LIBOR rate as this would ensure that the lender makes a profit - without a profit, the lender has no reason to be in business.

GG

silvercar

You chose a lifetime tracker; the people who chose a very low fixed rate wanted the security of that fixed rate at a time when that security was important to them or they judged that the deal was right for them. Presumably their mortgage broker explained the risks of going for a short term fix, including that it may not be easy to get another fix in a few years time if the markets changed.

It seems that some people took their low rates on the basis that they would be able to refix later on. In the mean time, arrangement fees on fxed rates have spiraled and lenders are more cautious, leaving some borrowers out in the cold. They and/or their advisors must take some responsibility for this as they chose the headline short term fix rather than a more secure longer rate.

sarkin

some people remeber when rates hit 15% and do not like to be on trackers for that reason. Acouple of years ago you could fix for 10 years at 4.99%, but everybody wanted the fee free 4.25% fix.for 2 years.

Gorgeous_George

It seems to be a mindset that needs to be broken. Just like switching energy suppliers is usually a bit daft.

GG