Before selecting a mortgage product it is worthwhile looking at likely interest rate trends: The Bank of England’s Monetary Policy Committee voted 8-1 to reduce base rate from 5.00% to 4.75% in November, having cut borrowing costs for the first time in four years in August. Further reductions are expected over the next couple of years, but at a slower pace than previously thought due to growing inflationary pressure following the US election and recent Budget. However, if the recent past 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 anticipates further base 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.