The Leeds & Holbeck Building Society has predicted that fixed rates under 5% will shortly be at an end. They are also advising borrowers to lock into low rates whilst they can. With the rise in interest rates, lenders are highly likely to either withdraw their low fixed rates altogether or re-price them in line with the increase. Other commentators have urged borrowers to opt for discounted rates because fixed rates may come at a premium.
Our View:
As everyone knows, interest rates have risen and this is going to have an effect on mortgage borrowing rates. Fixed rates are good for people that need to ensure their payments remain at the same level for a fixed term. Discounted rates allow people to take advantage of a reduction, whatever the standard variable rate offered. If you lock into a fixed rate and interest rates move significantly one way or the other, you could be better or worse off. If you are worse off and want to get out of the rate, there are likely to be significant penalties. Whatever your mortgage or re-mortgage needs, take advice and compare the different types available for you.