Friday 5th of August 2011
Not since 2007 have fixed rate mortgages been so cheap, leading to more and more people tying themselves into fixed agreements before the Bank of England decides to increase interest rates.
Two year fixed rates are, on average, currently available for 4.16%, with 3 and 5 year deals only slightly more expensive at an average of 4.72% and 5.16% respectively.
Although the Bank of England’s base rate has remained unchanged for well over 2 years, it is the recent reduction in the “swap” rates that have allowed fixed rates to fall. As a result they are now not too far behind the current tranche of variable rate deals.
The dilemma facing most people is actually when to fix rather than whether to fix. Experts are agreed that rates will rise at some stage but can’t agree whether it will be this year, next year or even, as some commentators are predicting, 2013. What we can pretty certain of is that base rates aren’t going to go any lower and so and it may well be prudent to consider fixing now rather than waiting for rates to start rising before then opting to fix.
Finally, please bear in mind that although numerous lenders have recently cut their rates, the very best fixed rate mortgages are only really available to those borrowers with very large deposits and/or plenty of equity in their current home.
By Gareth Hughes
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Unsecured lending on the increase as UK economy falters
