Can I hedge against mortgage rate increases?

S

SPC100

Registered User
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1,059
Hi,

I know you can fix a mortgage, but that is normally quite inflexible.

Is there a more flexible way to insure yourself against a higher future variable rate?

Is there a stockmarket position or spread bet one can take, which would limit the effect of future variable rate increases?

Thanks,

Sean.
 
This would be a great product, especially for those on cheap trackers who don't want to lose them by fixing.

However, I doubt if it would be very cost effective.

Whoever offers this "insurance" would have to charge an amount to cover the risk, their costs and their profit.
 
Talk to Paddy Power.
If they can do "Volcano Insurance", they can do "Interest Rate" Insurance.
 
Brendan Burgess said:
Whoever offers this "insurance" would have to charge an amount to cover the risk, their costs and their profit.
Click to expand...

I guess the only way to cover the risk, is to have someone betting"/"insuring" on the other side, which would reduce/eliminate the cost of the risk? and then only have their costs/profits to look at.

Interest rate goes up, you pay me
interest rate goes down, I pay you

It would only really suit ECB or Euribor trackers, as there would be no way to tie it to the SVR interest rate charged by your bank of choice.
 
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