Many people who are thinking about remortgaging or buying now have to decide between fixed rates or tracker rates. Variable rates don’t seem to be offered by most lenders anymore.
Fixed rates have been coming down over the last year and it is now possible to get a 5 year fixed rate at 3.99%. Some experts in the industry suggest that fixed rates have bottomed out now and that they could possibly start going back up again soon.
Tracker rates have gone up drastically over the last two years. It used to be the case that you could have a Bank of England base rate tracker discount. That is to say, you followed the Bank of England minus a percentage! Sadly those days are now gone and best tracker rates you can now obtain are Bank of England plus 2.29% giving a current pay rate of 2.79%.
So the question remains. Which rate would you choose, tracer or fixed? The answer to this question simply comes down to your own personal risk profile. A fixed rate will give you the security of an established budget regardless of what happens to the Bank of England base rate over the next few years. A tracker means that as soon as the Bank of England rate starts to go up again, so too do your mortgage payments. The problem is that no one knows when the Bank of England will go up and by how much.