Agreed, but if I was getting close to my limit of affordability just to get on the ladder I’d be more interested in keeping my payment at an affordable level than I would in gambling somewhat on the rate in order to get it cheaper sooner. Especially when the rate only really had one direction in which it could go. Great if it pays off, terrible if it doesn’t.Trouble with a long fix is you have no opportunity to get some paid off / benefit from increase in value and hit 90% or 85% ltv bands which would then reduce their monthly costs. We lost 20k on our old house so we had to stretch ourselves a bit, taking a 2 year fix initially meant that by the time we remortgaged onto a 5 year, we were at 85% LTV and our payments dropped a lot and that now goes into extra overpayments as we do about £600 a month over
In fact when I bought my first house back in 2006. I fixed for five years at somewhere around 5.5%, as I didn’t have much left over at the end of the month. Looking back at what happened in 2008, I now know that if I’d have gambled it would have paid off. But had things been different and rates gone up a couple percentage points, I’d have been up the creek without a paddle.
If it’s someone who’s stretched for something they just simply wanted. Then they could have achieved what you suggest by lowering their buying price, leaving them with more meat on the bone each month to take that gamble with.