The recent Your Move Remortgage Index has found that finding competitive mortgages is becoming more difficult as rates and fees rise. The index, which was compiled using information from MoneyFacts, a five year fixed rate mortgage will cost borrowers £380 more in the first year compared with a month ago.
Without shopping around, the cost to the average borrower choosing the wrong deal could be as much as £640 in the first year. Your Move believes that since confidence in the housing market is improving, lenders are beginning to raise their fixed rate deals. The index has showed that discounted variable rate deals are more competitive than fixed rates, yet 86% of borrowers chose fixed rates in November last year.
Our view
Mortgage rates fluctuate according to longer term interest rates. Trying to second guess what interest rates will be in a year is difficult. Our advice is to go with a rate that you know you can afford - but do not lock yourself in for too long, just in case you have made the wrong decision.