Fixed rate deals have been well over the 4% mark for months now, with average rates nearer 6%. However, the last couple of weeks have seen the introduction of some deals below 4% for borrowers, with other lenders likely to follow suit.
Many people have held off locking into fixed rate deals over the past few months, following a series of increases in the Bank of England base rate. However, with rates showing signs of stabilising and fixed rates starting to fall, now may be a good opportunity to fix, especially for those who need budgeting certainty.
Homebuyers and those who are looking to remortgage who may be worried that locking in now could mean they miss out on better deals if fixed rates continue to fall could still sign up to a deal they like, but then review it later on. Many mortgage offers are available for up to six months, which means you can have the peace of mind of getting a rate ‘in the bag’ now, but with the option to move to an alternative deal nearer the time if a more competitive deal becomes available.
Tracker rates still lowerAlthough fixed rates are gradually falling, tracker rates remain lower in comparison. As the name suggests, these deals track the Bank of England base rate plus a set percentage, so when the base rate goes up, so does the tracker rate, and when the base rate falls, the tracker rate falls by the same amount.
Tracker mortgages can be a good option if you’re comfortable that your monthly payments may change over time, or if you think that interest rates will start to fall later this year.
Some tracker deals come without Early Repayment Charges, which means that you may be able to sign up for a tracker and then move to a fixed rate later on if you want to. It’s worth bearing in mind, however, that many mortgage deals come with arrangement fees, so moving from one deal to another may involve paying two sets of fees in quick succession.