Is the premium charged for a fixed rate mortgage worth it?

Mortgage rates are going up which makes a fixed rate mortgage the safe bet. However some might argue with the base rate expected to remain low until 2014, a variable rate mortgage may seem more of a risk but the reward is cheaper mortgage rates.

With the Bank of England base rate expected to remain at 0.5 pc for the foreseeable future, a tracker option when compared against a slightly more expensive fixed rate mortgage would seem to be a good deal for those willing to take a risk.

With news that lenders such as the Manchester Building Society are going through their tracker contracts with a fine tooth comb to find any loophole to allow a rate increase, a fixed rate option may now be worth the higher rate that is charged.

Manchester tracker rates will be increased up to 4.74 pc in some cases, those notified of this increase from 1.5 pc to 4.74 pc should start reviewing their options now. Perhaps a fixed rate deal might be worth the premium paid after all.

Previously tracker mortgage holders believed that while the BOE base rate stayed low so would their mortgage rate – it would appear this might be about to change. Those who paid a premium for a fixed rate are probably reading recent news of rate increases relieved that they chose a more conservative mortgage route.

For those of you on a variable rate mortgage worried that your lender could bring in an increase, check your contract carefully.

Contact Deal Direct for advice, we can review the very best fixed rate mortgage deals currently on offer in the UK. We will search the mortgage market to source a cheap alternative product to suit you.