Should you fix or track your mortgage?
If your mortgage deal is coming to an end, you may be deciding whether to fix or get a tracker. With mortgage rates starting to drop and uncertainty whether Bank Rate has peaked, there is a lot to consider…
After 14 consecutive rises, the Bank of England held Bank Rate at 5.25% in September. Some are speculating that it has reached its peak. If, you believe interest rates will soon begin to decrease, you might consider a tracker mortgage; since the rate follows Bank Rate, you could benefit from any potential cuts. However, the disadvantage is that, if Bank Rate does rise again, your mortgage would too.
Amidst the economic uncertainty, you might prefer to have monthly payments that stay the same with no risk of them going up. Many lenders have reduced their fixed mortgage rates since the Bank of England’s announcement, so there are competitive deals on offer. However, if interest rates fell, your payments wouldn’t decrease. Since it can be costly to get out early, you would be committed to the length of the deal.
Considering this, you may think about moving onto a tracker mortgage temporarily while you assess the market and consider long term fixed deals.
Your home may be repossessed if you do not keep up repayments on your mortgage.