He attributed this to product pricing; as the issue became that the cap needed to be set at quite a high level.
This meant that many fixed rates undercut it by a large margin, so the borrower needed to be confident that the base rate was going to drop significantly and stay low for a prolonged period for the deal to work out better than the fixed rate.
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However, Taylor-Barr pointed out that, in most cases, that calculation simply didn’t make sense to the majority of borrowers, who would rather have the certainty of the initially lower cost fixed rate.
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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