With many people enjoying an unprecedented low mortgage rate this may sound like madness but according to a report in the Telegraph over the weekend the smart people may be ready to fix.
People who have come out of a fixed rate recently will be unable to believe their luck with the bank rate so low and many standard variable rates set at 3%. It is impossible to find a fixed rate deal that low so why on earth would you want to change?
Two reasons, according to the Telegraph. One your loan to value rate may soon be looking a lot worse if house prices continue to drop. This is a problem because lenders increase interest rates depending on your LTV rate. So if dropping house prices force you into say the 90% bracket, when you come to fix a mortgage you will be paying higher interest.
Secondly, fixed interest rates are likely to rise over the next few months meaning that when you do come to fix your mortgage you are likely to have missed the best rates. Most experts agree that we are as low as we are going to go on interest rates at the moment and this translates into ‘time to fix’
Stephen Noakes, marketing director at Cheltenham & Gloucester, says “If you’re remortgaging, historically low standard variable rates will be tempting, but this could prove to be a false economy. Fixed rates will inevitably rise over coming months and falling house prices could push you into a higher LTV bracket, putting you in a worse position to remortgage in the future.”
This is all definitely food for thought at a time where most of us are enjoying the lowest interest rates in years.
