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The 2 Year Fixed Rate Mortgage

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We are about to see a swathe of people heading for financial difficulties as their fixed rate loads expire. Why people take out 2 year fixed rate loans. Two years is less than 10% of the life of the average mortgage. Setting them up is expensive and moving loans to new borrowers is also expensive.

The years of ultra low interest rates would now appear to be behind us. Every few months interest rates ratchet up. Where will they stop? 6%, 8% or even 12%. We don't know. Fifteen years ago no one would have believed that interest rates could fall below 5 %. Three years ago however few believed that interest rates would rise above 5%. People are still taking out 2 year fixed rate deals.

Two year fixed rate deals have been one of the causes of the bubble (they allow people to borrow more than they can afford) and as they unwind, they will be a major factor in precipitating a crash.

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We are about to see a swathe of people heading for financial difficulties as their fixed rate loads expire. Why people take out 2 year fixed rate loans. Two years is less than 10% of the life of the average mortgage. Setting them up is expensive and moving loans to new borrowers is also expensive.

The years of ultra low interest rates would now appear to be behind us. Every few months interest rates ratchet up. Where will they stop? 6%, 8% or even 12%. We don't know. Fifteen years ago no one would have believed that interest rates could fall below 5 %. Three years ago however few believed that interest rates would rise above 5%. People are still taking out 2 year fixed rate deals.

Two year fixed rate deals have been one of the causes of the bubble (they allow people to borrow more than they can afford) and as they unwind, they will be a major factor in precipitating a crash.

How true this psychology is, same in stock market - it goes up so will never go down, it's goin down so will never go up.

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How true this psychology is, same in stock market - it goes up so will never go down, it's goin down so will never go up.

No, no, no.

Surely interest rates only go up? Things are different now, it was only in the old days they went down.

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We are about to see a swathe of people heading for financial difficulties as their fixed rate loads expire. Why people take out 2 year fixed rate loans. Two years is less than 10% of the life of the average mortgage. Setting them up is expensive and moving loans to new borrowers is also expensive.

The years of ultra low interest rates would now appear to be behind us. Every few months interest rates ratchet up. Where will they stop? 6%, 8% or even 12%. We don't know. Fifteen years ago no one would have believed that interest rates could fall below 5 %. Three years ago however few believed that interest rates would rise above 5%. People are still taking out 2 year fixed rate deals.

Two year fixed rate deals have been one of the causes of the bubble (they allow people to borrow more than they can afford) and as they unwind, they will be a major factor in precipitating a crash.

I read recently that 2 million people are coming to the end of their fixed rate mortgages which they took out in 2005. If i remember correctly figures i saw quoted said they are paying roughly £450 on 150k but new fixed rates would have them paying £650 on 150k and variable rates for people who don't sort this soon will be £900 odd! (figures are from memory and it isn't what it used to be :-)

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I read recently that 2 million people are coming to the end of their fixed rate mortgages which they took out in 2005. If i remember correctly figures i saw quoted said they are paying roughly £450 on 150k but new fixed rates would have them paying £650 on 150k and variable rates for people who don't sort this soon will be £900 odd! (figures are from memory and it isn't what it used to be :-)

Glad to hear it! I'm tired of holding the sh1tty end of the property-stick... I sat out of the market thinking I couldn't afford to buy with responsible multiples; I watched all these 'affluent and successful' types renting from the Bank. It's about time the sensible grown-ups had a chance; and, frankly, I will not be 'guilted' into feeling sorry for people who were profligate and greedy in 2005!

Grumpily

TD

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