Today the Bank of England’s Monetary Policy Committee again voted to hold the Base Rate at 0.5%. Of the nine committee members, two voted for an increase to 0.75%.
The Base Rate last changed in November 2017, when it was increased for the first time in more than a decade. However the Bank of England has stated that interest rates are likely to rise sooner than previously thought. Whilst this does not give any firm indication of future activity, it can be unsettling for mortgage borrowers looking to purchase or remortgage who may be unsure of whether to opt for a fixed or variable rate deal.
In this period of uncertainty most borrowers may see a fixed rate mortgage as the most suitable answer, in order to guarantee their mortgage payments for a set period of time, but in some circumstances they should not automatically ignore a discount option.
For example, broadly speaking across the mortgage market, discount rate products are largely cheaper than their fixed rate counterparts – albeit without the security. Of course, it must be stated that no one can predict when, and if, the Base Rate will move.
Borrowers should always carefully consider their mortgage options and ensure they fully understand the implications.