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Better mortgage rates start to emerge

After months of rising interest rates and even the suspension of many fixed rate mortgages from lenders due to the high demand from worried home owners and property purchasers, recent data has shown that lenders in the UK are now coming out with a range of affordable deals on fixed rate mortgages.

British homeJust recently, a number of lenders have introduced lower fixed rate mortgages, and it is thought that more fixed rate deals will soon be available.

The drop in fixed rate deals comes after a change in the predictions for the next interest rate rise from the Bank of England. The interest rate in the UK stood at 4.5% last July, but in August it went up by 0.25% to 4.75%. In November last year the rate went up again by a further 0.25% to 5%. And a shock interest rate rise of a 0.25% this January took the rate to 5.25%.

Many experts in the UK's money markets had been predicting that the next rise in the interest rate would be 1.5%, taking the rate to 5.75%. However, this prediction has now changes, and experts think that the rise will actually be a further 0.25%, which would take the rate to 5.5%. This new prediction has in turn seen lenders drop their fixed rate mortgage rates.

James Cotton, from advisers London & Country, stated: 'There are more good fixed-rate deals on the way. If you can fix in at around 5% or below, it is a good deal. But watch out for high set-up fees.'

Tom Smith
25th March 2007


More information:

  • What Is A Mortgage?
    With the price of property ever increasing and no sign of the long awaited bursting bubble of the housing market, we ask what can young first time buyers do to gain their freedom and set up a home of their own in such an expensive arena and what is a mortgage anyway?
  • Choosing The Right Mortgage
    The market is flooded with different types of mortgages, but how do you know which one is right for you? The decision has to be yours, whether you take advice from an Independent Financial Advisor or do your own research.
  • Why Does The Interest Rate Of Your Mortgage Change?
    The biggest difference between a mortgage and other types of loan is the fact that the interest rate changes throughout the term of the loan. Why is this? And which type of interest-rate arrangement is best?
  • Paying Off Your Mortgage Early
    Twenty five years is the average period of a mortgage… Twenty five years is a long time! The dream of many people is to pay off their mortgage early. Can it be done?


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