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Posts Tagged ‘Mortgage Rates’

These are interesting times for borrowers about to come out of a fixed rate mortgage deal. With the incredibly low interest rates available for variable rate mortgages, it seems like the best option would be to take the plunge and embrace tracking the base rate. On the other hand, with the new Government coalition thrashing out its policies whilst the country waits with baited breath, maybe it is time to play it safe and opt for fixed mortgage rates in London.

Believe it or not, despite the political and economic confusion in the UK at the moment, it is still better to back the variable rate option, especially if you took out your current mortgage before April 2009. If the Bank of England’s base rate were to go up, it would only be by a small margin at a time, a quarter of a per cent, and it would therefore take quite some time to reach the mortgage rates that are presently associated with a fixed rate mortgage.

Be warned though; just because you have chosen a mortgage with a rate that allows you a little spending money each month, it doesn’t mean that you should stick to your minimum payments just to be able to afford the odd luxury here and there. The advice of many brokers is to make overpayments whilst the interest rates are favourable and build up equity in your London property while you can.

Mortgage rates may be low now, but they will inevitably rise as the property market recovers and the economy becomes stronger. This means that the best bet for borrowers is to prepare for the time when a fixed rate mortgage is the better option. The larger the proportion of your property you actually own, the better fixed rate mortgage deal a lender in London will be able to offer.

After an announcement by the Bank of England, it seems that mortgage rates in London may actually become lower over the course of the year. Fears have risen of late that interest rates would rise because of quantitative easing by the Government. However, sources state that inflation will continue to fall until well into 2011 which is good news for Londoners wanting to secure a mortgage deal now and gain a return on their investment in the future.

London property prices have risen consistently for over a year now, making the UK capital a favourable place to invest in a property. If rates are set to continue to fall, obtaining a tracker mortgage could be a wise move for anyone wanting to purchase a property. There has also been an increase in the number of properties for sale in London, with a 5% increase in March this year compared to the previous month.

It may seem like the options are endless for buyers at the moment, and with mortgage rates in London set to continue to fall, it is a great time to invest. House prices in London have risen by around 20% over the last year, which is well ahead of the national average, which means that these properties are likely to reap rewards for their owners in the future.

The advice is to speak to a mortgage broker and find the best mortgage possible to be able to snap up a property before prices increase further, and whilst rates are still falling. However, as with anything that is tied in with Government plans, there are risks involved. Sceptics have pointed out that in the past the current political situation has meant that interest rates have actually risen, but will of course increase mortgage rates.

Ultimately it depends on whether or not a buyer is willing to take a risk and get a tracker mortgage. If the interest rates continue to fall, this could mean massive savings, but if they rise, homebuyers could face a huge rise in mortgage repayments. The alternative is to take the safe option and obtain a fixed rate mortgage to avoid a possible increase in mortgage rates.