Fix or float? What is the best mortgage deal at the moment?
More than 90% of new mortgage loans are now taken on a fixed-rate, with the most popular of these being a two-year fixed-rate. But with so much choice around, what is the best mortgage deal at the moment?
Not bad for a product that wasn’t in existence 30 years ago.
What has changed though is the percentage rate. In 1989, the best rate on offer according to Moneyfacts, was a 3-year fixed-rate deal from Nat West at 12.4%. At the same time, the average house price was £55,000, inflation was 7.8% and the Bank of England base rate was at 14.875%.
The most significant change in the two time periods has to be the average house price. Using an inflation calculator, £55,000 in 1989 should be £135, 705.64 in 2019. In June this year, the average house price stood at approximately £216,515.
However, the good news is borrowing is drastically reduced. House prices may be up, but mortgage costs remain low, for now. The Bank of England base rate has also remained low for the last decade:
However, there are predictions of Bank of England rate hikes in the foreseeable future. In 2018, the UK Office for Budget Responsibility (OBR) predicted that ‘By the first quarter of 2023, we expect the effective mortgage rate to reach 3.0 per cent.’ This is a far cry from bank rates of the past but would be a significant increase for those on variable rate, tracker and discounted mortgages or those due to come off their fixed-rate deal.
The question is, so you want to risk waiting for it to rise before acting?
If you would like more information about fixing your mortgage rate, please get in touch and our advisers will run through your options with you.