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Fixed rate mortgages are on the rise
Fixed rate mortgages are on the rise. For months mortgage rates for fixed rate mortgages have been at record lows with some less than 3%, but this week has seen lenders start to increase the rates – some by as much as 0.5%.
This means that if you’ve been thinking of getting a fixed rate mortgage but haven’t got around to it yet, that now is the time to take action.
While the Bank of England base rate is still at 0.5% it may seem strange that mortgage interest rates are going up, but while variable rate mortgages are usually linked to the Bank of England rate, fixed rates are linking to something called ‘swap rates’ which look at what interest rates are likely to do in the next few years – and all the forecasts are that interest rates are going to go up again and may go up quickly when they start.
About 60-70% of us have fixed rate mortgages. The good thing about them is that it means you know exactly what you’re going to pay out on your mortgage each month and you are not affected by interest rates going up and down while you’re in the period of the fixed rate.
The sort of people switching to fixed rates now are the people who are looking to the future and want to guard against their mortgage rate going up. There is a fine balance to be drawn between continuing to take advantage of the current low rates on base rate tracker or standard variable rate mortgages and guarding against being stung when the rates increase.
It is increasingly looking like we have reached that fine point now, so if you are worried about your mortgage payments rising now is the time to speak to a mortgage adviser and get advice.
19th June 2009
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