Should you get a fixed-rate mortgage or should you trust that interest rates will stay low and opt for a tracker or a variable rate? It’s the $64,000 question and no one really knows. However, you can make an informed choice with our mortgage help here.
No one has a crystal ball so even economists and mortgage experts can’t tell us whether interest rates will go up this year and, if they do, when they will go up or by how much. Here’s how you can make your own decision.
Frankly no one really knows. The only thing everyone is agreed on is that they are highly unlikely to go down. They only have 0.5% to go anyway and going down to 0% would really be admitting defeat!
The problem that the Bank of England has is that our economy is extremely fragile right now and it needs all the help it can get to keep itself going. Low interest rates encourage growth, encourage people to spend and help businesses keep going. However, inflation has started to creep up and the main weapon against that is higher interest rates. Also, the Bank of England would love to put rates up in order to claw back some of the billions it has lent out in the last three years. So they’re in a cleft stick right now – they want to put rates up but they really can’t and they may not be able to for a while.
If the economy continues to be rocky and fragile for many more months then interest rates will stay low. Who knows what is in store for us economically? No one can really guess because there are so many variables and so much that’s hidden.
If you really need to do something about your mortgage then get on and do it now. Better to be decisive than keep hanging around waiting for something to change…or not. Go to our mortgage comparison service and speak to London & Country about the best deal for you.
Take a look at your own situation. Could you afford to pay more if interest rates went up by 1% or 2% over the next couple of years (because they could do that)? Or do you really need to know exactly how much you will spend each month in order to budget properly?
If you need certainty then you should go for a fixed deal and forget what others are saying about interest rates. If rates go up you will be smiling. If they don’t, you won’t be pleased but you won’t have lost much. Similarly, going for a tracker or variable rate means you could be unhappy if interest rates go up but you will be smiling if they don’t. If you can afford to take the gamble, then do.
David Hollingworth says, “the key is to make your decision now and then go for it, finding the best deals and products to suit your decision. There has been a lot of speculation over the base rate rising, and if that gathers pace fixed mortgages might become more expensive. However, I don’t believe the rates will become much more expensive than they are now.”