Can mortgage rates get any lower or is now the time to fix?
According to market forecasters it is unlikely that mortgage rates will go any lower this year.
The base rate has been at 0.5 per cent since March 2009 with no sign of any increase, although new predictions have adjusted when the rate is likely to rise. For months it has been predicted that the rate will remain at it's historic low until 2014, but some recent predictions are reviewing this date to 2016.
Mortgage holders are already experiencing increasing mortgage rates but this has mainly been in the area of standard variable rates. Funding costs are being quoted as the reason for rising rates and while lenders could keep rates low, it is unlikely they will do so as their desire to re-build their balance sheet overrides mortgage holders needs.
However to be fair to UK lenders when setting their rates they need to factor in risk and in times of financial crisis they assess risk as high and set rates accordingly.
While mortgage rates may remain for the time being cheap historically speaking, they will begin to rise this year. Lenders are likely to raise rates to cover the FSA's demands to cover themselves adequately against bad debts.
The question will be what to do. Should you fix or stick with what you have?
Simply speaking if you a good level of equity at around 30 per cent and your current mortgage rate is 4.0 per cent or above, the likelihood is you will be able to achieve a better rate by comparing other lenders mortgage rates and switching to a more competitive deal.
For an up to date comparison of UK mortgage rates on offer contact Deal Direct today.
