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At the heart of general practice since 1960

Is now the right time to fix your mortgage?

Having enjoyed a period of low rates no one wants to be caught out if they were to keep rising, says

Gerry Berncastel

Once again the financial press were proved right when the Bank of England base rate was increased recently.

Although it was a small rise, only a quarter of 1 per cent, it did not take long for banks and building societies

to increase the rates of interest charged to their borrowers. Despite this increase in the domestic mortgage rate, the early signs are that the housing market still continues to be very buoyant.

In some areas, there are reports of a slowdown in prices but there still seems to be plenty of buyers out there.

Whether or not this is the end of the current round of rises in base rate no one can be absolutely certain, but there are predictions that the rate will rise

still further in the latter part of this year.

For this reason I am quite sure that anyone moving home, or perhaps considering a refinance of their existing mortgage, will almost certainly be looking at a fixed-rate mortgage.

Having enjoyed a period of low rates no one wants to be caught out if interest rates were to rise back to their previous levels in the late 1980s and early 1990s.

Although variable rates for domestic mortgages have been increased, and in turn the fixed rates have risen, it is still possible to fix your loan rate at what must be considered a competitive rate.

First we must decide how long do we fix for. The answer to this will largely depend on whether or not you feel interest rates will continue to rise for the foreseeable future or that this is just a blip and they will, once again, return to their previous levels of last year.

For those who only want short-term comfort there are a number of fixed rates around that will enable you to set your payments until at least the early part of 2007.

Currently, one of the most competitive fixed rates available is from a building society and the rate is fixed at 4.69 per cent until March 1, 2007.

There are, of course, penalties on the scheme which last until the end of the fixed-rate period and there is an arrangement fee of £399.

Obviously, a valuation fee would also be applicable, depending upon the value of the property.

If you were considering refinancing your existing domestic mortgage then you would need to take into account the cost of a solicitor acting in the transaction and this could be anywhere between £250 and £350.

For those who would like slightly longer stability, there are a number

of fixed rates available at around the

5 per cent mark lasting until early 2009.

As an example, one lender has a fixed rate based at 5.05 per cent until the March 31, 2009 ­ again there is obviously a penalty for the full term of the fixed rate.

There is an arrangement fee of £299 and again, of course, a valuation fee would be applicable.

Once again, if you are thinking of refinancing your existing mortgage, you would need to take into account the cost of a solicitor acting for you.

These are just two examples of the fixed rates that are currently available in the market, which is changing constantly.

I have no doubt that as we proceed into the spring, the traditional time that the housing market becomes even more active, further schemes will become available.

If you are, therefore, thinking of moving home or refinancing your existing domestic mortgage and would like a quotation for a fixed-rate loan, then complete the coupon below or alternatively e-mail the information to us at the following address: mortgages@pulseind.co.uk

Contact details

Telephone

01255 672112

Fax

01255 677756

E-mail

info@pulseind.co.uk

Write to

Pulse Independent I.F.A.

FREEPOST

147 Connaught Avenue

Frinton on Sea

Essex CO13 9BR

Your home is at risk if you do not keep up the repayments of any mortgage or loan secured upon it.

Our firm subscribes to the Mortgage Code, a voluntary code followed by lenders and intermediaries in their relations with personal customers in the UK. It sets standards of good practice which are followed as a minimum by us. We will follow and adhere to the key commitments of the code in all our dealings with you. Details of these key commitments, together with a summary of the requirements of the code, can be found in the leaflet You and Your Mortgage.

*Pulse Independent I.F.A. is a trading name of R. J. Hurst and Partners. Regulated by the Financial Services Authority. The Financial Services Authority does not regulate mortgages.

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