The UK independent mortgage broker offer their advice on mortgage rates
When Will Interest Rates Rise?
The Bank of England (BoE) base rate is set at 0.25% and has not been above 0.5% since 2009. But how long can this period of low rates last?
With inflation now at 2.9% you might expect the Bank of England to increase interest rates to bring it back under control, however, there are other factors in play that mean that interest rates are likely to remain as they are for a while longer.
Brexit remains the big talking point and BoE Governor, Mark Carney has voiced his concerns on several occasions and believes that Brexit will dampen growth for a number of years.
The BoE’s Monetary Policy Committee vote whether to increase rates. In their last round of voting at the start of August they voted 6 to 2 in favour of keeping rates as they are.
The view of many economists is that rates will not rise until the second half of 2019.
Should I Fix My Mortgage Rate Now?
Wesley Davidson, Director of Bristol Mortgage Broker, Fox Davidson suggests that fixing in now is a sensible decision if it makes sense for your situation.
“The decision to fix your mortgage or not is a personal one based on your current situation, your plans for the future and your attitude to risk!
Interest rates are at an all-time low so fixing in now can make a lot of sense. A fixed rate gives you certainty of knowing what your mortgage repayments will be. You can fix in for two, three, five or 10 years.
What most economists do agree on is that interest rates are only going to go one way, upwards. Therefore, it makes sense to fix your mortgage rate as soon as possible because by the time the Bank of England do increase interest rates you can be sure that the money markets will have predicted the increase and fixed mortgage rates will have already increased in price.
For homeowners that are sat on their banks variable rate of 2% or more, they are paying too much and could be fixed into a rate of interest at less than 2%. Fixing in now on a long term fixed rate of 3 or 5 years could pay dividends when rates potentially rise next year.
Any advice we give and the availability of the cheapest rates will depend on the client’s situation so it is best to speak to an independent mortgage broker such as Fox Davidson for a free initial chat to discuss what your options are.”