Interest
rates remain at the 4.5 per cent level, but a
rate rise of up to a quarter point by the end of the year is imminent. Rates have been stable for some time, but rising swap rates indicate that change is afoot. The
financial forecast is having a major impact on the
mortgage market; with
lenders reshuffling their ranges of
mortgage loans in order to meet the change head on.
Usually when
interest rates look like increasing
financial advice dictates that
first time buyers and
remortgage customers opt for fixed rate
payments . That way, the monthly
repayments are set and there is no likelihood of changes. However, experts in the mortgage market are instead urging borrowers to play the long game, and opt for
tracker mortgages .
Fixed rate mortgages have increased in price, due to long-term market uncertainty. Currently, better value for
money can be found in the
tracker mortgage market. The choice really depends on the affordability of the
loan deal for the individual consumer… and in some instances a
fixed-rate mortgage can be safer.
One expert was reported as saying: "It’s not always as clear cut as fix or tracker. What people should be asking themselves is whether they are already at the top level of affordability when it comes to their monthly outgoings. If so, and if even a small rise is base rates would stretch this, then they would be wise to opt for a fixed rate . If they have some leeway available then they would be better off with a tracker because, ultimately, all the pointers indicate that rates are unlikely to rise significantly in the next two years."
