Fixed rate mortgage or tracker?
The dilemma facing some remortgaging home-owners is whether to choose a fixed rate mortgage or a tracker.
The BoE base rate is now not predicted to rise until 2016, and added to this is the IMF's recent call for the BoE to reduce the base rate further.
Just how low could the base rate go? It was thought that having sat at 0.5% for over 3 years, the only way for the base rate to go was up. However the IMF have put forward the idea that the rate could go down to 0.25% or even 0% to save the UK economy from a eurozone linked recession.
If the Bank rate is cut then this should be good news for mortgage holders.
For those looking to remortgage the question is what would be best - a higher rate lower risk fixed rate mortgage or a lower rate higher risk tracker. If the base rate is cut and then remains at the new level until 2016 those on a tracker could be real winners.
It is believed that around 2 million existing tracker mortgage holders would benefit from a base rate drop, but that any reduction is unlikely to be passed onto those looking for a new deal.
UK lenders are looking to shore up their finances. They are currently increasing rates and restricting demand independently of base rate movements and so it is unlikely any interest rate changes will affect this trend.
Whatever type of deal you are considering, whether it is a fixed rate mortgage or tracker you are advised to contact Deal Direct for an impartial mortgage quote.
Deal Direct can advise you on which product may suit you best and search the market for the most competitive rates on offer.
Contact Deal Direct today.
