Would you go for a variable rate mortgage at the minute?

[OutComeTheWolves]

Mortgage is up soon and been speaking with mortgage provider about different options. We've always gone for fixed rate but one option at the minute is a discount rate that stays at X percent below the svr. At present that would be significantly cheaper each month than the best fixed rate that we can access.

I'm tempted and understand the risks. I was just wondering what the general consensus on here would be?

Most people will say no, which is borne out by the stats that most mortgages are fixed, but we've never fixed and are still on a lifetime base rate tracker that we took out about 15 years ago and are currently paying 0.6%.

However, I'd be wary about a SVR tracker because the bank doesn't have to move this in line with the BOE base rate, they can change it independently.

But it depends on the difference in the numbers, the length of time, mortgage amount, affordability and stability of your income.

I'd possibly go for it, because I can't see interest rates going up significantly because, despite inflationary pressures, there's a lot of personal, business and government debt that would get far more expensive if base rate went up a lot.

We've always had a variable rate (based on BOE base) because it's significantly cheaper than a 3 or 5 year fixed and I deem it unlikely that interest rates would rise as quickly as would be necessary for the fixed rate to work out cheaper.

Forgot to say that we've never fixed and it's been cheaper for probably all but about 6 months out of the past 26 years that we've had mortgages. And when it wasn't cheaper it was only a tiny bit more expensive, 0.5% maybe.

Certainty costs and the banks know a lot more about 'the economy' etc than the average member of the public, even those who are fairly financially literate.

Another one here who has never fixed either. It's more expensive to fix, thats what you're paying for.

We have always gone variable, until we sorted our current rate about a year ago as there was variable was the same cost.
I’m generally more comfortable with variable rates because you can adjust your budget as rates rise and fall whereas with a longer fixed you risk having your mortgage suddenly rise when the fixed rate comes to an end.

I think generally the banks are extremely good at getting money out of you whatever you do and over the years there’s probably not much in it.

We always had variable rates (and did very nicely out of it), but they tracked the BoE vase rate rather than the SVR. SVR can rise at any point, independent of the base rate.
How many percentage points would the SVR need to rise to match the fixed rate? And over what time scales are you looking?

Last time I was on a variable it did the maths based on the term and how much rates need to rise. In our case rates needed to raise by 3 % in the first 2 years to make it cheaper to fix. So we stuck with variable. When we fixed the next time the maths where in favour of a fix

I was on a variable rate for 12 years. I fixed at 6% in 2001 for 5 years, paid to come out then it dropped to 3.5% and then it dropped to the BRM and there I stayed until I fixed at the end of last year for 1.14 which was nearly 1% less than I was paying and I'm over paying the difference, it does mean I've lost the BRM option and will move to their SRV at the end of the term which is 100% more than the BRM.

Compare the best fix rates your provider is offering to the best fixed rates in the market. When I check mostly the cheapest deals are all fixes. Trackers and discounted don’t feature that much (not in the top 10 anyway).