Before selecting a mortgage product it is worthwhile looking at likely interest rate trends: The Bank of England’s Monetary Policy Committee maintained base rate at 5.25% in March, voting 8-1 in favour of a fifth successive hold. One member voted for a reduction. Inflation is falling fast and expected to continue to reduce and hit the 2% target in the spring. Financial markets are now pricing in three base rate cuts this year, the first of which is likely to be in the summer. However, if history has taught us anything we must continue to ‘expect the unexpected’.
It is impossible to be definitive which of today’s products offer best value. Pricing rose steeply following the now infamous mini-budget in September 2022, but has fallen in recent months as the market now anticipates rate cuts. Fixed rates offer protection going forward but the choice of term will depend on how quickly rates fall. Tracker products offer good value and excellent flexibility. Those with surplus capital should consider the tax advantages of an offset arrangement.