Before selecting a mortgage product it is worthwhile looking at likely interest rate trends: The Bank of England’s Monetary Policy Committee voted 6-3 in favour of raising Base rate from 3% to 3.50% in December, although the fact that two members voted to remain at 3% suggests we may not now see an increase to the 5%-6% levels only recently predicted by some economists, with many now forecasting that rates will peak next year between 4%-5%. The Bank warned however, that persistent inflationary pressures and a tight labour market could still warrant ‘a further forceful monetary policy response’.
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 and fixed rates have edge down in recent weeks. Tracker products still offer reasonable value and excellent flexibility, especially if bank base rate peaks at the lower end of expectations. Those with surplus capital should consider the tax advantages of an offset arrangement.