Before selecting a mortgage product it is worthwhile looking at likely interest rate trends: in their July meeting, the MPC voted 6-3 (up from 7-2) to keep interest rates on hold at 3.75%. The decision had been widely predicted as policymakers attempt to gauge future inflation numbers against a backdrop of an on-again-off-again peace agreement between the US and Iran. With economic growth slightly ahead of the curve, the short-term direction of base rate is on a knife-edge. Any sustained escalation in the choke points for global energy supplies will lead to a rate hike, whilst a continued ceasefire will enable the bank to see through the immediate increase in inflation. The MPC meet next on 17th September.
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 and has fallen steadily until recently. Volatility remains with the current geopolitical landscape. Fixed rates offer protection going forward, but the choice of term will depend on if and when base rate falls. Tracker products offer good value and excellent flexibility. Those with surplus capital should consider the tax advantages of an offset arrangement.