Before selecting a mortgage product it is worthwhile looking at likely interest rate trends: The Bank of England’s Monetary Policy Committee voted 7-2 to keep rates on hold at 0.75% at their December meeting. Inflation has now reduced to 1.30% and is expected to fall further in the Spring, well below the Bank’s 2% target. Despite Boris Johnson’s significant majority in the recent election, the Bank indicated that it may still have to cut interest rates if global economic growth fails to recover or if Brexit uncertainties persist. Economists now expect the Bank to monitor companies’ and households’ reactions to Brexit negotiations before deciding on their next move.
It is difficult to be definitive when recommending which of today’s products offer best value. Both short and long term fixed rate arrangements are priced competitively as we hover close to the bottom of the current interest rate cycle. Base rate tracker products without redemption penalties offer excellent current value, the potential to reduce further and maximum flexibility. As always, those with surplus capital should consider the tax advantages of an offset arrangement.