Fixed rate rush expected
A Midlands estate agency is predicting that an increase in the Bank of England base rate will prompt a rush for fixed-rate mortgage deals, as homeowners panic about the threat of a succession of interest rate hikes.
Heywoods Property of Newcastle-under-Lyme said that few in the industry thought that the Bank of England could keep the base rate at its extraordinary low level for much longer.
And once the rate moves back upwards, Heywoods expects to see a flood of enquiries to its mortgage advice bureau as borrowers stampede to safeguard themselves from the impact of further increases.
But Heywoods is urging homeowners not to panic to fix their interest rate, as they could end up being worse off than if they'd stuck with a variable rate deal.
It said that fixed-rate deals were often likely to end up being more expensive than a variable or tracker rate, given that an arrangement fee would run into several hundred pounds.
What's more, it added, if the borrower needed to redeem within the fixed-rate period then they could be hit by a massive redemption penalty of thousands of pounds.
However, the company advised those customers concerned about whether they could afford significant increases in the mortgage rate to nevertheless consider a fixed rate.