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to think that ordinary people should not have to take a punt on their mortgage rate?

(341 Posts)
Mintyy Wed 08-May-13 18:39:22

Just had letter from our building society.

Our mortgage is going down from £800 and something a month to £379.75.

This is because we opted for a fixed rate 5 years ago when rates were 5.something % (sorry for vague details, but ykwim).

Now that "offer" has come to an end so we are going on to the standard variable rate which is currently 2.5%

I could RAGE, SCREAM AND WEEP at the amount we would have saved over the past 5 years if we had not opted for a fixed rate at the time.

Aibu to think that I didn't ask to take a punt on what mortgage rates would do, I am not a gambler and I am not interested in taking risks.

It really makes me absolutely hopping mad I tell you!!

blueshoes Fri 10-May-13 19:55:55

Minty, you should have rented. Oh fuck, rent goes up and down too! <Wails, beats breast>

TheDoctrineOfSnatch Fri 10-May-13 19:48:43

There are several different LIBOR rates, from overnight to 1 year. I think colloquially the overnight rate is usually meant. Banks wouldn't borrow mortgage finance at LIBOR as that's not a short term package.

lljkk Fri 10-May-13 19:32:14

It's called choice, OP had a choice <<shrug>>

Ilikethebreeze Fri 10-May-13 19:07:16

Thanks for that caroldecker.
Do the high streeet banks, when they "buy" from the LIBOR, or however it is done, do they themselves get charged. So for instance, the LIBOR rate is 0,5%, but the actual cost to them is say 2.5%, then they charge another 2% on top to "sell" it to us? Is that how it works in practice?

Actually, I thnk I have managed to confuse myself.

caroldecker Fri 10-May-13 19:00:57

LIBOR stands for the London InterBank Offer Rate and is the average rate that banks lend to each other.
The govt base rate (0.5%) is the rate the Bank of England pays to banks who park money there overnight.
Generally, LIBOR is about the same as the BOE rate, but can be more (such as in the height of the crisis).
LIBOR cannot be lower than 0%, so practically as low as possible.
However, longer term (5+yrs) fixed rates are not based just on LIBOR, but where people expect rates to be over that period, because the bank will have to pay that rate to the shorter term depositors/lenders it gets its funding from.
Therefore fixed rate deals can go up and down whilst LIBOR stays flat

Ilikethebreeze Fri 10-May-13 17:32:03

Mimishimi, can I ask you something about the LIBOR rate please and how it works.
LIBOR, is it not, is the rate at which banks are charged, or is it a rate and LIBOR adds commision on top?
[and then the banks add on their commission to us]
And the LIBOR rate currently is 1/2%, so realistically, it is not going to ever go lower than that?

ivykaty44 Fri 10-May-13 15:32:36

point three includes fixing your mortgage

Spuderoonerism Fri 10-May-13 06:11:07

If you really want to insist it's a gamble then fixed rate is the same as going into a casino and playing perfect strategy blackjack over an large number of hands - you know pretty much exactly what it's going to cost you over time assuming you play a fixed number of hands per hour. Going with a variable rate is a gamble in the same way that spread betting on the total number of runs in the Ashes is a gamble - you could do well out of it (ie better than the person churning out the blackjack hands) or you could get absolutely shafted depending on how things totally outwith your control go and you have no idea what your maximum potential liability could be.

Mimishimi Fri 10-May-13 00:28:59

Mintyy, were you aware that the banks also borrow money to lend to homeowners? They also have to pay it back with interest although the interest is less. For the past couple of years, they've been able to borrow at virtually zero interest rates and that is why they've been able to lower rates for their customers. When they take you on, the loan they give you is a reflection of the rates that they are paying at the time of granting the loan, not future rates. You're actually lucky that you've come off the fixed rate period into a low rate environment. Imagine if you came off it and rates were 9-10%? They also have to gamble that their customers will be able to pay them back, which is what all the kerfuffle about failing banks was a few years ago, because they'd either made loans under incredibly lax conditions or had bought mortgage debts from other banks thinking they'd be able to get those debtors to pay ( but couldn't).

Like PP's have said, financially, you will do best if you treat it like you've never come off the fixed and keep paying your £800 a month - seven years feast/famine type scenario for when rates do rise ( and they will).

Kewcumber Fri 10-May-13 00:14:38

I'd like to know why adults have to pay £1 entry to our local soft play?

ivykaty44 Thu 09-May-13 23:43:37

no - kids get everywhere now, next they will be in the bookies first pubs then hotels and mark my words they will be in Barlows bookies quicker than you can say jack sprat...

MummytoKatie Thu 09-May-13 23:40:04

Yep. And to add insult to injury at the weekend it is absolutely jam packed full of kids!

ivykaty44 Thu 09-May-13 23:29:00

I never use soft play so had no idea it was cheaper in the week day

MummytoKatie Thu 09-May-13 22:54:16

Why is soft play more expensive at the weekends?

Bearbehind Thu 09-May-13 22:49:14

Because you are not making any sense and are not offering an arguement to the very valid points made on about 300 posts on this thread.

It would be lovely if you could have the best possible outcome in every situation but you can't so you just have to get on with it.

Ilikethebreeze Thu 09-May-13 22:45:53

Bear. Why am I not doing her any favours? I think she or someone said she had another thread. Am I upsetting her financial arrangements in some way?

Bearbehind Thu 09-May-13 22:38:44

I don't know crikey but it really pisses me off that fireworks are so much more expensive on 4th November than the 6th!

Crikeyblimey Thu 09-May-13 22:36:20

Ha ha ha! Is this REALLY still going on?

Now can someone tell me why red roses are more expensive on 13th and 14th Feb than they are on 15th?

MummytoKatie Thu 09-May-13 22:35:57

Because the cottage owners are big meanies and have stinky bottoms and it's just sooooo unfair

(I'm 37 weeks pregnant. I'm supposed to be watching my blood pressure. If I stay on the side of sanity and logic it is so not going to happen!)

Bearbehind Thu 09-May-13 22:35:49

ilikethebreeze have you been sniffing paint or something? You are making no sense at all and, as just about the only person who agrees with mintyy, you are not doing her any favours wink

Ilikethebreeze Thu 09-May-13 22:32:50

I prefer "what do we think will happen to interest rates in the next five years". Much more topical!

TheDoctrineOfSnatch Thu 09-May-13 22:30:29

Next up: why vacation cottages cost more in the school holidays.

<pulls pin, chucks grenade, legs it>

Ilikethebreeze Thu 09-May-13 22:25:21

Never mind. I agree to differ with virtually everybody.
I dont really care. It is really just a debate about words.

Ilikethebreeze Thu 09-May-13 22:24:15

Actually, I would say the first one, not the second.

MummytoKatie Thu 09-May-13 22:23:08

Debates giving bookies analogy again but I've given it twice and I just can't face it!

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