Is the variable rate mortgage dead?
Are you still recommending customers look at variables?
What advice are you giving customers on variable deals?
Have you seen any customers in fact pay ERCs to come off of variable products in recent times?
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Variable rates and discount rates can sometimes be suitable for clients who wish to avoid tie-ins and early repayment charges. Tracker mortgages are also becoming more popular as it looks like we are close to the base rate peak.
Like in all scenarios, a detailed discussion with the client is key to evaluating all options and recommending the most suitable to their unique situation. A large factor is how much disposable income the client has, and whether they could afford a possible increase in their mortgage payments in the hope of potentially benefitting from future rate reductions in the medium term.
Like in all scenarios, a detailed discussion with the client is key to evaluating all options and recommending the most suitable to their unique situation. A large factor is how much disposable income the client has, and whether they could afford a possible increase in their mortgage payments in the hope of potentially benefitting from future rate reductions in the medium term.
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The majority of clients I speak to want some form of certainty around what their mortgage will cost them; hence the fix rated mortgage is still as popular as ever; there are some exceptions where tracker rates are considered and even taken by clients who risk appetite and income allows a fluctuation in mortgage payments.
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As of 1st August lender's Standard Variable rates range from 5.94% with Newcastle BS to Aldermore's "Mount Everest Rate" of 9.48%, with two of the "Big Six" Lenders Barclays and Halifax coming in at an eye-watering 8.49% - needless to say with recent volatile rate hikes, and the possibility of some softening on rates, until these variable rates follow suit, recommending a Tracker or more importantly Discounted or Variable rate, is like jumping in the rapids without a canoe. "You might be ok...you might not". Some of these products will fit certain clients' circumstances particularly any products with higher fixed discounts, on discounted terms with low Early Repayment Charges or none at all, potentially on a 2yr basis - as for writing this type of business currently, I would say not all favorable for many clients, who need more assurances then ever.
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We still see a place for tracker mortgages; generally where clients have the risk appetite and wiggle room in their budget to allow for higher rates in the future. We generally wouldn't be recommending a tracker product where there were ERCs in place as one of the big reasons to use them has been the flexibility offered to come out of the deal without any penalties.
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Variable Rate mortgage products have been popular over the past several months, and we have taken advantage of these sorts of products over the last 12 months.
With interest rates firmly on their downward trajectory, I think variable rate products still have a way to go, as some interest rate gamblers will continue to ride the downward trajectory of product pricing over the foreseeable future.
With interest rates firmly on their downward trajectory, I think variable rate products still have a way to go, as some interest rate gamblers will continue to ride the downward trajectory of product pricing over the foreseeable future.
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What is the point of a variable at the moment, you're going onto a rate which is almost certainly going to keep increasing for a bit and then just re-mortgage and fix in for 2 years minimum meaning you will most likely be on a higher rate for two years and six months as opposed to 2 years on a higher rate and then, most likely, a lower one
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It's a brave adviser who recommends variable rates at present, despite the fact that they may turn out to be the best option given where fixed rates are. Most variables are currently tracking at a margin below fixed rates but the unknown question is how far further base rates have to travel. I would consider recommending variable rate for those clients with smaller mortgages when affordability is not such an issue should rates start to rise again. Customers on variable rates should remain on them if they are locked in via repayment penalties, alternatively they should consider their fixed rate options. I have had clients on ERC free variable rate deals who have come off of these to fix.
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The fixed vs variable debate has never been more active. With the cost of living still causing difficulties for many, clients are really looking to keep their mortgage costs as low as they can.
This obviously varies from client to client, but in many cases, variable rates are still lower than their fixed counterparts.
Where we are recommending variable rates, we're looking to model potential rate rises and what this could mean. This uncertainty isn't for some, but is still appealing to a large proportion of clients.
This obviously varies from client to client, but in many cases, variable rates are still lower than their fixed counterparts.
Where we are recommending variable rates, we're looking to model potential rate rises and what this could mean. This uncertainty isn't for some, but is still appealing to a large proportion of clients.
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Its not dead yet, its defo harder to find a profitable BTL property, but its certainly working still for some landlords.
Clients on variable deals should lock in for at least a couple of years. I cannot see these rates dropping with in that time.
Some clients have paid off ERC's to enable a fix for a longer term, but most are holding out and hoping for a fall before they refix at the end of their current deal.
Clients on variable deals should lock in for at least a couple of years. I cannot see these rates dropping with in that time.
Some clients have paid off ERC's to enable a fix for a longer term, but most are holding out and hoping for a fall before they refix at the end of their current deal.
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Varaible are still popular and tend to show more flexibility when compared to a fixed rate. There is more to consider but can be perfect looking to make large overpayments or are inbetween deals or nother move. However gone are the days of capped variables so this would be a welcomed addition from a challenger lender out there