Active discussions

Meet the Other Phone. Protection built in.

Meet the Other Phone.
Protection built in.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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

340 replies

Mintyy · 08/05/2013 18:39

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!!

OP posts:
TheDoctrineOfSnatch · 08/05/2013 22:50

A rant is fine, but the actual AIBU question to which people are responding is about "punts" on mortgage rates.

If the AIBU was "ah, what could I have done with that £ if I'd chosen differently" then there'd've been a different response.

AnyFucker · 08/05/2013 22:50

Why, Bob, you don't even know me < coy > Smile

Sleepwhenidie · 08/05/2013 22:51

Because - forget the house - you were borrowing money over a very long period and interest rates move up and down over time, so the interest rate was always going to move. You take the pain/benefit of the up/down on a variable rate, or you fix the rate so you know exactly what you will be paying, then take the pain/benefit the other way, with the comfort of knowing that if the rate went up, you were limiting your exposure at 5%. If you don't like either option, don't borrow the cash!

ivykaty44 · 08/05/2013 22:51

actually I would be gutted Sad

i had a fixed rate mortgage at 8% and was lucky as only over paid for about the last 6 months and then got out of it about 6 months early due to BS clerical error. The rate had gone down to around 6.5% but I had had 4 good years paying less and had had four years fixed before that paying 4% when rates were around 10% so I had done well.

I think though buying property like buying shares in a company is similar to gambling as prices can go up or down and it is risky

FunnysInLaJardin · 08/05/2013 22:51

sure this has been said, but why didn't you swap to a tracker? We did 4 years ago and have saved over and over the £15k penalty

Technotropic · 08/05/2013 22:57

Mintyy

I think you are asking the impossible. Nothing can forward predict whether something will go for or against you. Certainly not for 25 years anyway. If you want 100% certainty then do not take out a mortgage.

The only solution to your problem, and to escape all the interest woes, is simply to save up all the money yourself and then buy once you have saved up the right amount. I'm not taking the mick but its the only way to escape the frustration you're experiencing.

Original poster
Mintyy · 08/05/2013 22:58

Anyfucker
I thanked you for your thoughts right back at the beginning of the thread. I know you are right and I will let it go.

Dh understands me (a rare thing) totally "we might just as well have taken that money to a casino". All I wanted was for a few Mumsnetters to get a feeling for my point and I am grateful that they did.

OP posts:
OrWellyAnn · 08/05/2013 23:02

Yabu. If you want to buy a house these are the constraints, they may not seem fair to you, but you knew the risks when you went in and that particular gamble didn't pay off. You don't like the system then don't buy a house. This is just one of the reasons I am happy to be a renter. Everyone bangs on about the price of houses, but you add the interest to most house prices, assuming 10 or 20% deposit and you are paying at LEAST half as much again...unless you can afford to overpay, which most people can't, because they have bought close to the limits of what they can afford...

Honestly, if people hadn't gone so crazy about house ownership in the last couple of decades a heck of a lot of them would be significantly richer, or signicifantly poorer, depending on when they bought. Of COURSE your mortgage rate is a gamble, so is the whole house ownership game, no more stable than shares or betting!!

Kewcumber · 08/05/2013 23:02

Fixed rate mortgages didn't exist at one time (or were as scarce as hens teeth). They were brought in by popular demand because people didn't want to worry about mortgage rates going up and becoming unaffordable. I suspect it all happened when people started taking out mortgages at the absolute maximum of what they could afford.

The mortgage companies go out into the market and buy money at a fixed rate as well and sell that at a margin as fixed rate mortgages - they haven't made off like a bandit with your extra £22k.

I can see it would be immensely annoying but interest rates are relatively stable these days so you either pick a fixed rate which seems pretty close to variable rate and enjoy the certainty - or chose a rate with no redemption penalty and rate surf every few years (though with charges this can work out just as expensive an option).

FIxed rates are NOT a gamble - they are the opposite - they are absolute certainty of your largest cost - and you have to pay for that, generally a couple of points above the variable rate.

Original poster
Mintyy · 08/05/2013 23:05

But why does it have to be a gamble? Why can't it be a straightforward transaction where you know what you are paying ... as in when you buy a loaf of bread, or your house insurance, or a car?

Would people be just as sanguine if they found out they had been overpaying their rent by £500 per month for 5 years?

OP posts:
tallulah · 08/05/2013 23:06

If it's any consolation we did the same many years ago and fixed at almost 8% when the rate then went down to 4ish.

EverybodysStressyEyed · 08/05/2013 23:06

you borrowed money and had to pay for that

you could have taken that money that you borrowed to a casino and won more or lost the lot

or you could have invested the money you borrowed into a house in the hope that the value of that property went up.

who do you think is sitting with the £20-30k?

Sleepwhenidie · 08/05/2013 23:07

You can't live in stocks and shares though Orwelly...if your house drops in value at least you can use it while you wait for it to rise again Smile, admittedly the problem, of course, comes if you can't keep up repayments and are in negative equity...

TheDoctrineOfSnatch · 08/05/2013 23:08

Mintyy, if you wanted to buy home insurance now to cover the next 30 years, you would pay a different total premium to someone who renewed every year.

Viviennemary · 08/05/2013 23:09

It is annoying. We were on a fixed rate for five years but only paid over for a short while. But on the other hand if Building Societies think the rates will go up they won't be offering long deals at low rates. So I think beware of those offers.

SquirtedPerfumeUpNoseInBoots · 08/05/2013 23:09

I hate to wade in here, as you've had lots of good advice ^.
But youre old enough (by your own admission, I'm not stalking you) to remember when fixed rate was a new thing. The banks didn't offer it before. It was explained to us what this new thing meant in the 90's.
I've had standard rate, variable rate, fixed rate. And switched as appropriate.
I pay someone to give me advice. I evaluate that advice and take responsibility for my decisions.
Same as any other purchase.

But you seem to be in the position to overpay your mortgage and take years off it. If your glass is half full, look at it like that.

CherylTrole · 08/05/2013 23:10

Mintyy just wanted to say I totally get where you are coming from!
Mortgages give me the shits Grin No words of wisdom for you, but I am counting my blessings mortgage wise and am aware that my situation is not perfect, but it could be a hell of a lot worse. Chin up love!

Crikeyblimey · 08/05/2013 23:10

I like to think I have good advice up there but I appear to have been being smug. I'm not smug. We have a small mortgage because we live in an ordinary house that we could afford and have been laying this 15 year mortgage off for 10 years. It could go tits up (thanks for that) but if it does, providing our savings don't go up in smoke - we will pay it off. Oh and a cheap shot, I know but you've infuriated me - to have enough savings to do this, we not only have been frugal but my mother had to die :(

Frankly, I should just give up because all you want to hear Mintyy is that you were robbed blind and nobody seems to care..

Sleepwhenidie · 08/05/2013 23:11

Mintyy, you did know what you were paying, for five years at least.

No one could tell you with certainty today how much a car or a loaf of bread will cost in ten or fifteen years, same with the cost of money (interest). The movement in price is because of the time period involved.

TheDoctrineOfSnatch · 08/05/2013 23:12

It's like if you wanted to guarantee a petrol supply for 10 years - the price you pay would be different to the price you'd pay tomorrow at the pump.

Something you buy over a long period (in this case, money) doesn't have a defined price in the way a loaf of bread you buy tomorrow does - because the parties are trying to price in the risks associated with that product (money) over time. When you buy an item like bread, there's no time variable to be considered.

TheDoctrineOfSnatch · 08/05/2013 23:13

X-post sleep!

FunnysInLaJardin · 08/05/2013 23:13

the thing is Mintyy that most folk with a mortgage kept an eye on interest rates and when they went down they adjusted accordingly. It is shit but tbh if you had thought about it you could have taken advantage from the lower rates.

We spent £15k shifting from a 6% fixed to a tracker 4 years ago. We took a gamble and it paid off for once. We were paying £36k pa on our mortgage and for the last 4 years we have been paying £24k pa. So due to our gamble we have saved £48k Shock. Although we did pay £15k to get out of our fixed rate, so a net save of £33k pa

Technotropic · 08/05/2013 23:14

OP

All things have a fixed price. If you bought your house today it would cost you £180k and not a penny more. The same goes for your car or a loaf of bread.

The issue here is how much you should be paying for the privilege of borrowing money you don't have. You see it as a gamble but in reality I think it's more of a gamble for the bank to assume that we are all going to be gainfully employed for 25 years non stop. During the recession and previous ones, banks have probably lost money due to repos.

FunnysInLaJardin · 08/05/2013 23:14

sorry £33k overall

OrWellyAnn · 08/05/2013 23:21

Well no, but at least if the value of your stocks and shares crash you don't have to lose the house over your head to pay back the bank because you can't get the value you paid for them. Generally people wouldn't push themselves to the absolute limit to own stocks and shares the way they have to own bricks and mortar, and yet they are both subject to Market forces and both vulnerable to crashing. In fact a mortgage has the added vulnerability of interest rate changes....