Whats happening with mortgage interest rates? To fix or not to fix, that is the question!
March 20th, 2008
- Posted by giftwrap
- Filed under Mortgage Advice
- Whats happening with mortgage interest rates? To fix or not to fix, that is the question!
Well none of us have a crystal ball so no-one knows for sure . I have heard brokers recommending Tracker rates that track the Bank Base Rate (BBR) and I read that the amount of take up for fixed rate mortgages has fallen significantly recently. Isn’t it interesting that as Trackers become more popular the lenders hike the margin over BBR that the customer pays, but then that’s the law of basic economics I suppose!
So its easy to see that with the current credit crunch lenders finding it harder to “buy in” the money which funds fixed rates so they have become more expensive. But are we losing sight of what a fixed rate was intended to be? Because if we all accept they were meant as a means of budgeting for a set period then there should be no reason for their popularity to have reduced. It’s just that we have become used to lower interest rates over the last 3 or 4 years and that made fixed rates easy to buy into for the man in the street.
Which brings me back to the crystal ball affect. The only thing we really know for sure is what we CAN afford to pay each month and if that falls within the cost of a particular fixed rate then it has to be a sensible measure whilst of course also considering personal circumstances and needs.
This is the simple analogy I always use with my customers - yes fixed rates are more expensive right now and at any given point in say a 5 year fixed rate you might gain or lose against non fixed rates. BUT as none of us know what those rates will be and when, doesn’t it still make a fixed rate a sensible option to budget on. With so many other costs not being constant - fuel, household utility bills, food etc - surely having a constant cost for your biggest outlay makes common sense!
