You should certainly be skeptical that in the long run it will pay off to fix interest rates. This is because if you go out of a fixed interest loan after the interest rate has fallen, you have to pay a premium. This premium is to cover the loss the lender suffers because he has tied up the loans at a fixed interest rate. Gradually, too, many have begun to pay similar subsidies.
For a long time, a fixed-rate loan is most likely to be more expensive
Than a floating rate loan, because the borrower must cover the lender’s risk premium, and thus it is really the risk argument that is most important for choosing a fixed rate loan. One advantage of fixed rate loans is that you know what to pay during this period. In addition, you are secured against a rise in interest rates.
The fact that fixed-rate loans normally have a higher interest rate when you take them up can be regarded as a form of insurance premium. The question is how big the premium (interest rate differential) should be. Nor is there anything in the way of dividing the loan into two, a fixed portion and a floating one.
If you are to fix the interest rate,
It is our opinion that this should be at least for five years. It is only then that you start to get long-term predictability. Even 3 years is a short time when talking about a long-term mortgage. But the premium (the interest rate difference) is the greater the longer the binding period.
Interest rate fixing is most important for those who can solve the biggest problem with a rise in interest rates. If you cannot tolerate the rise in your mortgage interest rate, you should tie all or part of the loan.