This is a question that is continually asked by homeowners and prospective first time buyers in Nottingham alike. The answer will entirely depend on how the market is performing at any particular time.
To ensure you are updated about ongoing changes in the market, such as fluctuations in mortgage interest rates or government schemes, it’s advantageous to keep an eye on our YouTube playlist titled “Mortgage Market Update”. We prepare these updates regularly to keep our clients updated.
What are mortgage rates?
These are the interest rates that a mortgage lender will impose on your existing mortgage balance. These rates will decide your monthly mortgage payments. Lower mortgage rates result in less expenditure per month.
How are mortgage rates determined?
There are several variables that influence your mortgage rates. Some of which can be controlled by you, such as your credit score or an anticipated deposit amount. The less risky you appear to a lender, the better the rates you’re likely to secure. As a reputable mortgage broker in Nottingham, we can assist in understanding your personal circumstances to find the most favorable mortgage deal for you. Additionally, our mortgage advisors in Nottingham have access to thousands of mortgage deals, including several specialist options.
However, the determining aspect still remains the performance of the economy, the current market situation, and the Bank of England base rate. If the economy is in healthy condition, property demand often increases. This results in a hike in the Bank of England base rate and consequently, an increase in mortgage rates. When the economic scenario is unfavorable, it typically leads to reduction in interest rates to encourage home buying with potential lower mortgage payments.
Mortgage Rates Affected by Inflation
Inflation can directly affect the Bank of England base rate and consequently the mortgage rates. When the cost of living exceeds the government’s target, it may result in financial hardship for those approaching the end of fixed-rates, leading to potential rises in their payments.
Fixed-Rate Mortgages vs Tracker Mortgages
Tracker mortgages mirror the fluctuating Bank of England base rate, making them a viable option when the base rate is low. However, if the rate goes up, the monthly mortgage payments could increase. A Fixed-rate mortgage offers stability by locking in the current interest rate for a chosen period.
If the interest rates increase during this period, you won’t be affected. At the end of your deal, you might be exposed to higher interest rates, which might prompt some homeowners to consider remortgaging before their deal ends.
How long should I fix my mortgage for?
This decision is based on your prediction of how interest rates and personal circumstances might change. Lower loan-to-value due to a higher deposit can provide access to lower rates. In such a case, a longer-term fixed-rate mortgage can help maximize the benefit of lower interest rates. However, interest rates could drop further during this term, leading to potentially missed savings. A dedicated mortgage broker in Nottingham can guide you in making a well-informed decision.
Book Your Free Mortgage Appointment Today
Scheduling a free mortgage appointment with us can provide clarity if you’re nearing the end of your mortgage deal, or if you are thinking about buying a house for the first time. Offering remortgage advice or providing guidance to first time buyers in Nottingham, we aim to find the best possible mortgage deal with the most suitable rates.
Date Last Edited: February 7, 2024
