Nelson Mortgages

Over the past year and a half consumers that have been on variable rate mortgages have had to deal with the effects of a series of five interest rate rises, which has resulted in soaring monthly mortgage repayments for many homeowners. Those that took out cheap fixed rate mortgage two or three years ago have managed to avoid the pitfalls of these interest rate rises.

However, even these consumers are set to suffer if their fixed rate deals are due to come to an end in the next couple of months, as they will have to pay interest rates that are far higher than their existing fixed one, which could mean a difference of hundreds of pounds a year.

Whilst interest rates were still going up many mortgage holders flocked to take out a fixed rate deal so that they would not be affected by further rises in interest rates. Fixed rate mortgages offer a number of benefits to homeowners, and the most important of these is the financial stability of knowing that your interest rate and your repayments will remain the same for a specified period of time with no upward or downward fluctuation no matter what happens with the base rate.

However, a fixed rate mortgage can be seen as something of a gamble too, as although it can work out great when interest rates are on the up it can prove costly when interest rates start to come down again. Many first time buyers tend to opt for a fixed rate mortgage in order to enjoy increased financial stability, but it is important to ask yourself in light of industry predictions whether a fixed rate mortgage is the best idea at the moment.

The base interest rate has already come down by 0.25% earlier this month, and according to many experts interest rates could fall a further two or three times next year. Some industry professionals are predicting that the base rate could fall as low as 4% by the end of next year. Therefore anyone fixing themselves into a set rate now could end up paying way over the odds next year when interest rate fall further.

A number of experts are suggesting base rate tracker mortgages may be the best choice for many people at this stage, as the interest rates on these mortgages fluctuate in line with changes in the base rate, so any future reductions in the base rate next year will be reflected in the interest rates charged on the base rate tracker mortgage, affecting repayments accordingly.

Of course there is no definite way of predicting how many interest rate cuts there will be next year or when they will take place, but taking on a fixed rate deal at this stage could be a costly mistake if the industry experts are to be believed. It is therefore advisable to speak to a professional mortgage broker if you are thinking of taking on a mortgage or remortgaging at this stage, as these experts will be able to run through the different mortgage products available in order to help find you a mortgage that is well suited to your needs.

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