VARIABLE RATE V FIXED RATE

You assume wrongly. While you may be able to find fixed rate deals for as long as 10 years or perhaps even longer, they won't offer very low rates. Typical low-rate deals are fixed for shorter periods, like between 1 and 5 years. The shorter the period, the lower the rate (in general).

Fixed Rates are generally higher, and also are more likely to include Tie Ins, That is is why people choose them. They are looking at bottom line immediate costs and flexibility.

who will be better off if rates rise by 2 points VR or FR ? surely the VR people are taking a gamble ? seems like classic British short-termism at work.

As RR said, you assume wildly and wrongly. A large proportion will be fixed for 2 or 3 years.

Again, you assume incorrectly, variable rate is the norm and has been for years!

I suggest you stop assuming and start learning before pontificating in public.

I am looking for enlightenment here so please post some stats . thanks. PS is it not the case that they are the norm in the UK but shunned like the plague in France for example ?

I dunno, this is uk.finance.

Who will be better off if they dont?

So are the FR people! They are gambling rates will rise above the average of where they fixed over time (or they cannot afford a rise). In the latter case, they are gambling their employment status will remain the same.

Why? Seems like a reasonable bet. So far, from what I recall of interest rates, you'd have been better off over the past 10 or so years by just jumping from one 2 or 3 year fixed rate to the next one, irrespective of the fact that 2 or 3 years isnt exactly long term for interest rates. Someone who took out a fixed (say) 10 year at hmm, what would rates have been 10 years ago...lets say about 10% I'd guess (8% ish, plus 2 extra for the 10 year fix???) would have lost out big time.

In message , snipped-for-privacy@hetnet.nl writes

As another poster has already pointed out, most fixed rates are for five years or less, but there are some available up to 25 years. The longer the variable rate stays below the fixed rate, then the higher the variable rate has to rise before the FR becomes the 'cheaper'.

It seems sensible to me to take a discounted rate now, and in my own case I'm saving the difference between my current payment and what I would be paying if the interest rate was much higher, in a separate fund which I can fall back on if necessary.

Mortgage lenders do not let you borrow more when interest rates are low, so you should be able to still afford the payments should they rise. I would only suggest going to the expense of a fixed rate if you can tie yourself to one lender for a long time and would struggle if interest rates were to rise.

More like opportunism to me.

In message , snipped-for-privacy@hetnet.nl writes

Well as other posters have pointed out, they arent fixed for ten years. In fact the vast majority of Fixed Rate mortgages that are being taken are only fixed for 2 years or less. Its hardly worth calling them 'fixed' for such a short period, more of an 'introductory offer', and I reckon the majority were not taken because they were 'fixed' but because, taking all charges into account, they were still competitive. One of the major factors mortgagors take into account is 'flexibility', although few of them make use of the features of flexible mortgages. By their very nature, Fixed Rate mortgages aren't very flexible.

True, but if the fix is only for a couple of years its makes no difference.

Another wrong assumption Im afraid. Believe it or not, there are loads of people with longer term fixed still @ 10% from years ago.....

Possibly. As interest rates rise then there will still be an opportunity to switch to fixed rates IF the punters are savvy enough.

Interestingly, the Gilt Yield curve is very flat at the moment and longer term interest rates arent as expensive as in the past. The lenders will provide a long term fixed rate product if their is sufficient demand BUT 'FIXED means FIXED and if you want a 'get out' in a few years (as most borrowers seem to do) then the penalties on a long term fix, or the complexity of the penalty calculation, debars long term fixed rates.

Sadly, IMO it is the current nanny attitude of the state that is at fault here. The pnealties for getting out of a long term fix at say

"john boyle" wrote

In effect a synthetic fix - pay yourself the extra and draw it down if you need to.