Are you considering a fixed rate mortgage?
There are many people at the moment who are considering switching to a fixed rate mortgage amidst fears that the base interest rate could increase over the next few months, leading to a rate rise on variable rate mortgages and resulting in higher mortgage repayments. Over recent months many homeowners have waited with bated breath each time a Monetary Policy Committee meeting takes place to see whether the base rate is set to increase.
The speculation with regards to whether the base rate will increase over the next few months has continued to increase. Many believe that the base rate will stay at its record low of 0.5 percent for some time to come because of concerns about the continued fragility of the UK economy. With the rate setters still having to consider the effects a rate increase could have on the economy at what is still a very difficult time some believe that it would be irresponsible for the MPC to increase the rate at this stage.
At the same time many believe that the fact that inflation has soared to way over the 2 percent target set by the government means that the MPC will have to increase the base rate in order to bring inflation down and then keep a lid on it. If this is the case then the base rate may increase sooner rather than later, which could result in homeowners with variable rate mortgages seeing their interest rates and repayments go up.
Anyone that is considering whether or not to switch to a fixed rate mortgage needs to do a little research. It is important to look at the fixed rates that lenders are offering to determine what sort of rate you will be able to get if you do decide to switch. It is also important to work out whether you would be able to afford any increases in repayments if the base rate was to rise.
In this particular climate, with so many differences in opinion with regards to future interest rate movement it is difficult for people to decide whether to switch to a fixed rate deal or just continue with a variable rate one and hope for the best. Some people have already taken action and switch to a fixed rate before the rates go any higher in anticipation of a base rate rise.
Tags: committee meeting, speculation, interest rate, rate increase, increase, uk, anyone, factOne official said: “The stand-out trend in the mortgage market at present is the increase in the number of rate-wary borrowers remortgaging onto fixed rates. People know that rate rises are coming and they are locking in now before fixed rates move higher. Essentially, borrowers are running for cover.”
