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Fixed rate versus non fixed rate

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 20. October 2022

Looking to speak to mortgage brokers about advice around fixed rate deals versus other offerings. 

  1. Are you seeing more interest from clients in tracker/variable/offset/not fixed rate deals? If so, why?
  2. Do you think interest will grow for non fixed rate offerings? What are the benefits and downsides to non fixed rates?
  3. When would you advise someone to take up a tracker/variable/offset?
  4. What advice would you give to people coming off their deals in the next few months?

5 responses from the Newspage community

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Bob Singh
Founder at Chess Mortgages
If TV pundits are to be believed we should all remain on the Standard Variable rate !! Whilst this is partly the view taken by some advisers why not consider a penalty free tracker or discounted rate that sits around 3% below the fixed rate equivalent? Rates would have to rise to 5.25 before you were any worse off but with the caveat that they could go higher. Any savings made in that timescale could be clawed back but till then you will save on your monthly payments Fixed rates still have their place in the market but the other options certainly warrant a conversation. Offset mortgages are great where borrowers have a significant amount of cash lying around but one has to do their sums to see if the premium is worth it
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Mike Staton
Director at Staton Mortgages
We have seen a major increase in the amount of tracker mortgages being taken out by clients, these clients are wanting flexibility at the moment ahead of stability. With tracker rates starting as little as 3% it is easy to see why, however they are not guaranteed to remain at that rate so do come with an element of risk, if you are listening to some tv pundits who are not regulated by the FCA as well as not being CeMap qualified then you may find yourself sitting on your SVR on double the interest rate with the same penalty free get out clause. Do be careful though as not all trackers are penalty free and some come with tiny rules that if missed, could see you stuck with that lender for the long term
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Graham Cox
Director at Bridging Hub
Two-year base rate trackers are available at around 3%, almost half the rate of an equivalent fixed rate mortgage deal right now. But of course that could change very quickly if interest rates go up as expected. They are a gamble, but because fixes are so expensive, they're worth considering. The other benefit is they often don't have early repayment charges, so you've got the flexibility to switch out if they become too expensive.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
I’ve had as many people who were already on a trackers or variable rate go on to a fixed rate as I have had people coming off fixed rates to go onto a tracker or variable. It’s horses for courses as each client’s circumstances are different and you advise each one on a bespoke basis. Nationwide have taken some flack from brokers over the last 12 months however their no ERC and no arrangement fee tracker product has saved my clients thousands over the years with the flexibility it gives.
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Tom Bradley
Founder at Thomas Bradley Mortgage & Protection
Despite the challenging mortgage climate, what was true before remains the case, start the process of securing your mortgage 6 months before the deal ends, any broker worth their salt will be watching the rates thereafter for you to ensure you get the best deal in the months leading in to your renewal. The right thing is certainly not biding time on a variable rate, the suggestion of leaving your future financial position to chance and timing is frankly wreckless and irresponsible. In our business we're seeing a huge upturn in the take up of discount rate mortgages, available at less than half the price of a fixed rate, these historically overlooked products offer great appeal and when explained the stigma of a variable rate is soon overcome, our clients have benefitted learning about them and feel their finances will benefit from such arrangements.