Your Mortgage: Is it time to switch and save?
Catherine Alexander
Partner
On the 23rd March we saw the Bank of England Base Rate increase for the 11th time since 2022, increasing the pressure on those with mortgages currently on the lenders Standard Variable Rate (SVR), who are on tracker products, or those with mortgages coming to the end of their fixed rates.
Tracker deals became increasingly popular in previous months as more customers looked for the cheapest rate. With a tracker mortgage you could pay a cheaper rate than fixed rate products, especially if the base rate falls or stays the same - however, many fixed rates have now been reduced and so it could be the right time to consider fixing in. Many tracker products have no Early Repayment Charges (ERCs) and so you could switch and save without incurring any penalty.
A tracker mortgage is a mortgage with an interest rate linked to the Bank of England’s base rate. For example, you could get a tracker mortgage that’s interest rate will always remain at 0.75% above the base rate. When the base interest rate increases, your monthly mortgage repayments will go up. When the base rate decreases, they’ll go down. The 0.75% difference will stay the same for the duration of your tracker mortgage term.
Experts in the financial services industry have predicted that the base rate may be held at the current rate of 4.25% or increased once more this year before falling back to 4% in 2024. This is in line with an expected fall in consumer price inflation by the Monetary Policy Committee (MPC).
But we know that making a decision on your mortgage is not only about getting the cheapest rate, it’s also important to work out what works best for your situation. With mortgage rates on a downwards trend, and with many lenders having already factored in interest rate fluctuations in the short-medium term, fixing now would allow many to ensure their monthly repayments remain within their budget and then hopefully see rates having come down further when that fixed period comes to an end.
If you would like to speak to us about your mortgage we would be happy to do so. You can either speak to your adviser directly or contact us by telephone or our website.
