Most experts agree that the Bank Of England is likely to raise interest rates in the next year or so in order to control inflation when we head into economic recovery. According to an article in The Times this week some banks are jumping the gun and putting up rates on fixed term deals in anticipation.
This means that people who are currently enjoying a record low interest rate on tracker loans may need to bite the bullet very soon and fix their rate, if they want to avoid getting trapped by the rate hike.
It is a judgement call for most people as fixing terms now when the rate is so low will mean an immediate jump in monthly repayments for those that have been tracking base. However, waiting could mean a substantially greater jump in the near future.
Louise Cuming, head of mortgages at moneysupermarket.com, said: “Borrowers looking to fix should lock in quickly, before the next tranche of mortgage products come through showing drastically increased rates.”
It is probably sound advice but it is always a bit of a wrench to voluntarily offer to pay more on your mortgage, even if you can see the long term benefits.
