Fixed rates offer cheaper repayments than variable – Moneyfacts
Its data showed the lowest two-year fixed rate mortgage undercuts its variable rate counterpart by 0.03%. The lowest fixed rate has gone from 1.58% a year ago to 1.05% today compared to a variable rate tracker mortgage which has fallen from 1.54% to 1.08% in the last 12 months.
Bank of England Governor Mark Carney said the first interest rate rise for six years could be expected around the turn of the year; part of the Monetary Policy Committee’s strategy for returning inflation to a sustainable rate within two years.
Finance expert at Moneyfacts Charlotte Nelson said in light of this, a variable rate tracker could no longer be considered the best way to ensure lower monthly payments.
Moneyfacts’ comparison data showed borrowers opting for the lowest variable rate at 60% loan-to-value would cost £442 a year more than the lowest two-year fixed rate if the base rate rose by 0.5%, based on a £150,000 repayment mortgage over 25 years.
“These highly competitive fixed rate mortgages will only be on the market for so long and once they’re gone, they’re gone,” said Nelson. “Mortgage holders therefore need to act fast to secure the best deals while they have the chance.”