It's ok cutting the BoE base rate to 1.5% to try and stimulate spending. But, what about the millions of home owners who are on a fixed rate mortgage. Sweet FA. Why can't the banks be forced to reduce their fixed rate mortgages by 1 - 1.5%?
Will the government ever do this?
"Slider" gurgled happily, sounding much like they were saying:
I hope not, for the exact same reason that I'd hope that if interest rates went the other way, the banks would not be permitted to raise the rates for those with fixed rate mortgages.
There's a clue in the name of the product.
Exactly. Anyway, most fixed rate products are time-limited, so that when the fixed-rate period expires, the mortgage reverts to the standard variable rate, which *now* means that it would get cheaper, even though at the time the loan was sold, expectation was that it would get more expensive.
You win some, you lose some.
as per what others say.........it's the gamble you take.
The big deal a few months back seemed to be the large numbers of people on fixed-rate mortages facing increases when the fixed rate came to an end. Now that the end of the fixed rate means a lower rate, they're still not happy.
In my case, 100% of my income comes from interest on savings. Am I complaining? No.
If rates had skyrocketed, would you be prepared to pay to the government some of what you are saving, to help those who didn't take fixed rates? No, I thought not.
Rob Graham
For the same reason that Banks can't be allowed to increase the rate of a fixed rate mortgage if base rates go up.
tim
Bitstring , from the wonderful person Slider said
You're ignoring the fact that funds have to COME from somewhere. If you'd like to lend your money to your friendly BS (or government) at
2.5% fixed, be my guest .. heck, I might borrow some myself.Or would you suggest they borrow it at LIBOR (floating) and lend it out fixed, and eat the difference if/when rates rise again?? .. That seems awfully close to the great business practises of Northern Rock.
I'm still relatively happy with my fixed rate.
4.59% a five year fix taken out about three and a half years ago. Over the piece it has served me very well.Neb
DUH !? .... because they are FIXED RATE mortgages!
They won't.
When people took out fixed rate deals, they did a deal: they got the safety and assurance of a fixed repayment amount for a period of time in exchange the bank took the risk that [variable] interest rates might rise and they wouldn't be able to pass the rise on to the customer.
The downside to getting a fixed repayment amount is that you lose out when interest rates go down. Tough!!! Fixed rate borrowers made their bed, and they have to lie in it. Life can be tough sometimes LOL !
It's not even that simple.
The Bank will have "bought" the money off of someone else at the fixed rate.
It is this third party that's taking the risk.
tim
Because they are still paying me 7% on some of their fixed rate bonds.
And paying the government 9% on the preference shares resulting from the taxpayer bailouts.
The government wants banks to borrow at 9% and lend at 2%. It's almost as if they want them to be bankrupt.
FoFP
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