Before selecting a mortgage product it is worthwhile looking at likely interest rate trends: The Bank of England has again cut its UK growth forecast to 1.2%, the slowest since 2009 when the economy was in recession. The Bank said there had been an ‘intensification’ of Brexit uncertainties and sees a one-in-four chance of the economy slipping into recession in the second half of the year. Financial markets now put the chance of a rate rise this year at less than 50%, however, don’t rule out a rate cut if there is a ‘no deal’ Brexit.
The Bank repeated previous guidance that future increases in rates would be at “a gradual pace and to a limited extent”. It is difficult to be definitive when recommending which of today’s products offer best value. Short and long term arrangements are both priced competitively but most experts now feel we are past the bottom of the cycle. It is likely that as rates rise the margin between payable mortgage rate and base rate will narrow. Those with surplus capital should always consider the tax advantages of an offset arrangement.