Before selecting a mortgage product it is worthwhile looking at likely interest rate trends: The Bank of England has warned the UK is facing the longest recession since records began as it raised Base rate from 2.25% to 3%, the biggest jump since 1989, in an attempt to control rapidly rising prices. Economists are split on how high they feel base rate will go. The ‘doves’ feel any more than 4% will harm the economy whilst the ‘hawks’ feel that 6% will be needed to tame inflation.
It is difficult to be definitive when recommending which of today’s products offer best value. Product pricing rose rapidly in the aftermath of the mini-budget but now appears to have settled. Tracker products still offer reasonable value and excellent flexibility, especially if bank base rate peaks at the lower end of expectations. Fixed rates are at their highest level for over a decade and will hopefully edge down a little over the coming weeks. Those with surplus capital should consider the tax advantages of an offset arrangement.