Break costs on fixed rate mortgages are massive - in some cases around $50,000 depending on the fixed rate and the amount. Given that the government is throwing money around the place to get people spending, and baling out companies on a massive scale, I am trying to work out whether I think there should be some form of government assistance to help people out of fixed rate mortgages, and get them on an even keel with everyone else who is being prompted to "spend for the nation". On the one hand I think fixing interest rates is a risk and those mortgagees now have to suffer the consequences of their decision. On the other hand, people who fixed their rates when rates were going up presumably thought they were acting in a fiscally responsible manner given the constant talk of inflation. Therefore shouldn't they be entitled to some assistance now? What does everyone else think about this?

Kaly,
Anyone considering a fixed rate would surely assess the risk as well as be aware of the break costs. This is about personal responsibility.

One would assume that the fixed rate is only for a short period of time over the life of the loan and that the mortgagees, all things remaining the same, would still be able to afford the repayments.

However it would be good PR for the banks if there were some failsafe to protect people from the huge break out costs in the event of serious illness, death of a partner, disability and sudden unemployment. The sorts of things that cannot be foreseen and can be insured for within the loan.

Ultimately it is up to the bank concerned and we all know that they are not known for altruism where profits are concerned.

In this instance, I don't think bailing out those on fixed interest rates is the responsibility of other taxpayers.

Pelican

Agree with your points regarding fixed mortgage rate.

Having chronic poor health makes meeting my mortgage payments difficult and was impossible to predict when I first bought my home, being in excellent health. There is no assistance at all for people who , as you say, "..... be good PR for the banks if there were some failsafe to protect people from the huge break out costs in the event of serious illness, death of a partner, disability and sudden unemployment. The sorts of things that cannot be foreseen and can be insured for within the loan."

I do not intend to offend in any way Kaly, however, giving a break to people who deliberately fixed their interest rate is not a paramount priority compared to many other circumstances that can befall people.

KALY....when you "chose" to fix your rate.. you also decided "yes..I can afford this, and this will immunize me from SKYrocketing interest rates"

But now.. rates have come down.. I'm sorry but dems da breaks. Not only have they come down..but my mortgage is costing me around $300 LESS/month than it did 6 months ago.... and I assure you..I'm reallll glad about that!

When we did NOT lock in to fixed... interest rates were still going up... and up...and up..... now... they are down. That's life.

Next time you have an opportunity... maybe re-think the options?

The reason you fix rates in the first place is to try to save money. Your choice, you can't have your cake and eat it.

Fixing rates has always been risky business.

Sorry but no one is responsible for loans other than those taking them out.
And only the one who gambled fixed interest rates was the better bet has to pay.
Softening the landing for those in trouble in the end put more in trouble.
The very heart of American loans issue is attempts to make it easer to get in dept, more problems would follow.
My sympathy for your problems, but more cheap government housing for those in need is as far as we are likely to go.