Beat the rate rise

Mortgage analysts have been weighing into the extended post-mortem of the increase in the base rate of interest with advice on how mortgage holders can keep their costs down.

The quarter-point rise to 4.75 per cent will affect everyone with tracker, discount and variable rate mortgages, adding around £250 to the annual payments of a £100,000 loan.

But with a bit of legwork, there is no reason to pay the extra, said Neil Pritchard of Moneypilots.

“The mortgage market is still very competitive and there are some great deals to be had if you shop around,” he said.

“We recommend that people review their paperwork, check whether they are on a fixed or variable rate deal, and get some advice about the best route for them.”

Fixed rates have been rising over the past few months in anticipation of a rate rise and are unlikely to offer the best rates, unless you want to gamble against another increase.

Taking the opposite view, some of the best trackers would still be competitive even if rates increased another half point, which is unlikely, said Ray Boulger of broker Charcol.

“An ideal combination is a tracker or discount with a droplock facility, allowing the borrower to switch to any of their lender’s fixes in the future if and when they consider the fixed rate offers better value,” he added.

© Adfero Ltd

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