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

[Mintyy]

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!!

Your "sticking a pin " actually, that"s what most people do ,not literally but yes ,take a guess, cos as said by others ,if anyone knew for sure ,they would be a zillionaire, and no matter how its dressed up ,it will always be a punt ,can"t stand the heat?.......bitch on mn, because that's all you got,same as everyone.

then Mintyy you need to see your rate as the right price. The price you could afford to pay for your loan and close your eyes and ears to what other folk got and what might have been. You could afford it, you kept your house, so all is well. It's not fair that others got a cheaper loan, but really that is life and banking is a business like any other.

I have recently been stung by my bank btw so don't think I love them or owt, just that banks are shite, but so is life!

How do you think I feel. I got pet insurance for a lot of money and then my cat never got ill. I just worked out that if I hadn't taken out any insurance I would have saved all the money. The insurance company forced me to gamble on my cat's life! WTF? AIBU?

The other day I was going somewhere on the bus, so I bought a bus ticket. Do you want a bus pass he said. No I said as I wasn't going anywhere else by bus that day. Turned out I had to go somewhere by bus later that day so I lost money?

Is it really fair that ordinary people should be forced to gamble on bus tickets like this? All I want is to go somewhere by bus when I want to, not have to place expensive bets on my activities later that day! AIBU?

WhenI was a child, the cost of a loaf of freshly baked bread (not the preservative laden stuff that sits on the shelf for a week) was the equivalent of 35p. Now it is about £2.75. I didn't sign up for taking a punt on my grocery bills when I was born. It is what it is. You yourself said that variable rates were higher when you took out the loan. Have they been 2.75% the whole time?

The other day I bought a half pint of lager in a pub. Then I wanted some more so I bought another half, costing me 10p more than if I originally bought a pint. However I prefer to hold the smaller glasses so I was able to get over it.

Is it too much to ask that pubs simply serve the drinks you want, that the price isn't set until after you've finished drinking the total amount, and that they simply charge exactly what the beer cost them, plus a fair profit, say 5%? And if anyone in that or any other pub got a better deal than you did, that price would retroactively apply to you, so you didn't have to take a gamble on which pubs are the cheapest?

Also, who wants to drink in the cheapest pub in the area? I've only been there once, and I was with my mum, and they gave her a tiny little mixer orange juice in a big glass with no ice. I would much rather go to the Railway Tavern, but with the reassurance that I wasn't paying any more than I would elsewhere.

Then I had to be like 'Don't worry, this pub is not a reflection on the area I choose to live in.' so that my Mum wouldn't judge me. At the time I was new and so I didn't know about the other pub.

I like my street. Why should I care if my mum judges me?

I actually had to order a pint of Stella, and drink it, only to express my disdain for the orange juice.

Also my DH went in their to use the loo once and ended up getting shouted at by the landlord, and buying a Coke and leaving it on the bar.

Is it wrong to want to have a quiet drink somewhere that doesn't have an in-house dog?

And LaLa goes off on a tangent .... or few

I do get your point Minty. And I think the Banks and Building Societies have been a bit devious in those offers. I think those fixed rates were meant to be attractive to people who were worried that rates might go up but instead they crashed. So people lost out.

And what about people who lost out over endowment mortgages. They lost money. Finance is a gamble. And a lot of people are suffering because of very low interest rates on their savings.

DH said he was going to spit in the Coke before leaving it but he realized that no-one who was sitting at or working behind the bar was remotely interested in drinking it.

Lots of advice on here about why someone would take out a fixed rate loan (certainty of repayments) vs 'gambling' on the variable rate.

I guess one way to think about it is to ask yourself why the fixed rate for a loan is almost always higher than the variable. It's the premium that you pay for knowing what your repayments will be. If you're sailing close to the wind in terms of affordability, you might well pay a bit more to fix your home loan so that there are no unpleasant surprises if the rates go up.

It's like people think that it's easier to pay the money to prevent a worse outcome (i.e. inability to pay mortgage/loss of house)

Like some others, I've had various mortgages in the past. Probably the best situation for me was having 75% fixed and 25% 'line of credit', which is what I did back in 2001 with my first mortgage. I had the option of knowing that I wasn't going to get wiped out if rates did increase (though sadly not benefiting if they decreased... which they did for a while, similar to your situation) but I could put all my savings, + salary (+ my husband's) into the line of credit facility, which meant that it ended up being fuck-all in interest, with the security of being able to access the money instantly. Can't figure out how I was wiser at 21 than I am now, but there we are ;-)

Mintyy, I do understand what you're talking about. The decision whether to fix a rat or to stay variable is a gamble, and it's one with a million variables, and it is unreasonable that the biggest purchase of one's life involves a 'guess' that can have such huge financial ramifications.

I actually don't understand all the people who are saying "you should have educated yourself more" because it's fairly common ground that very few people, including specialists, predicted that rates would stay this low, for this long.

HOWEVER. And this is what a lot of people are explaining and you are not getting. The current rate is not set by the banks, or the government, in an economic vaccuum. There is NO WAY for anyone to know what rates will be in five years, because it will depend on the global economy. The banks aren't keeping a secret from you. In order for them to function, their rates need to reflect the appropriate economic situation. Which they cannot predict.

So they CANNOT fix it. It sucks that you effectively have to gamble, but you have to gamble because by its very nature the "cost" of borrowing money is unknown. By everyone. It is impossible to fix a price.

Good post, tortoise,

Thank you! I was particularly proud of my reference to repairing rodents.

Floating rates better as there is risk attached, do it if you can afford the risk. Fix at a premium if you can't. Quite simple and not a punt a question of risk affordability.

Fwiw I once had a mortgage that was half fixed half floating...

Tortoise You go ahead and mend all the rodents then.

Seriously, good post about why 'one rate to catch them all' can't work.

We are finally coming off our disgusting rate of 6.22% this year so I do share some frustration. However, I agreed to a 3 year fixed rate 5 years ago, stating categorically that I didn't want to pay that rate for more than 3 years and was prepared to take a risk on it at the end of the term. What has actually made me angry was the fact that when the mortgage offer came through it was fixed for 5 years with a 4000 penalty but if we rejected it we would have lost our dream house as we needed the offer then and there. We also paid 1000 for the fabulous deal. So, I took it on the chin for the first 3 years as I wholeheartedly accepted the point of the fixed rate as frustrating as it was, but the last 2 years I frequently curse the broker who clearly got a slightly bigger bonus because we went on the rate for 5 years and curse me for not pursuing it with the Fsa at the time.

When this mortgage comes to an end this year I will however fix again as it is only at 2% for5 years, even if rates stay low, THAT is a wholly acceptable rate and I love that I can fix it.

Occams, that's what we had as well except they call it an offset account here. The only difference is that we could put any amount of money in ( like a regular savings account) except that instead of receiving interest for the savings, that would go towards the interest on the mortgage. We piled every penny into that account because the more you had on it, the less interest you'd pay. The bank makes money from it by hopefully (from their perspective) making a greater percentage on the spread. We bought a unit so didn't have a huge mortgage but it would have taken a lot longer to pay it off without that account ( we estimated about double the time and we would have paid a lot more).

I am saying that it is wrong to ask everyday (even reasonably well educated people like me and dh) to take a punt on what interest rates are going to do when they take out a mortgage.

thats the bit that you have round the wrong way minty, no one asked you to take a punt - YOu choose to take on a fixed rate rather than a variable rate

I can't actually believe, after 10 pages of people explaining this to you you still say things like 'I think the banks should offer a product where people are paying a fair price and the right price for the length of the loan'

That is exactly what happended when you fixed for 5 years at 5%, you got a fair price based on the future predictions and duration of your loan.

What I find far more interesting is that somethings don't add up with the figures in your posts.

You say you are over paying yet £379 per month at 2.5% on a £180,000 loan is interest only so any additional payments are not so much over paying as making a small dent in your capital repayment, which if you only make the minimum payments, you are not even touching.

If this is the case you really need professional, independent financial advice as you don't seem to have a clue what you've signed up to.

Asking random people on an Internet forum for advice because you 'like' them is even more bonkers than taking out a mortgage without any information.

Something that might make you feel better is that there are very few banks who's standard variable rate is 2.5% as it is only 2% over base.

Most svr's are 4%+ and those banks who used to have clauses which said their svr would never be more than 2% above base have removed these clauses in recent years so if you hadn't taken your loan out 5 years ago, it's likely your svr would now be much closer to the 5% you were previously paying.

It just goes to prove you win some and you lose some. No one can predict the future and you have to make an informed decision and be prepared for the outcome.

Hang on, what the FUCK Are you playing at? You reckon you overpaid 400x12x5 and the CHOICE to re-mortgage would've been 2000?

Do you see any difference in those figures? Once again, you had a choice - in fact you had a choice each and every day for 5 years but you chose to stick your head in the sand and whine now.