With Bank Base Rate (BBR) now at 0.5% and lenders pricing their tracker mortgage products well above this level, Email is urging consumers to think seriously about the range of attractive fixed-rate products available.
It also suggested that those consumers currently sitting on their lender’s standard variable rate (SVR) could be better off moving to a special fixed-rate deal which would provide stability and competitiveness in a very uncertain economic time.
For those homeowners with 75% LTV or less, Email believes now could be the time to "lock-in" to a three or five-year fixed rate deal which could be secured at a rate of approximately 4.50%.
The most competitive tracker rates currently available are BBR plus at least 2.75%, which may make them slightly cheaper products now, but not if Base Rate moves to more "normal" levels in the short-term. Therefore, for those consumers intent on choosing a tracker, Email suggests capped tracker products are currently the best option.
Michael White, Chief Executive of Email Mortgages, said: "While the Monetary Policy Committee’s decision moved BBR to 0.5%, we are urging consumers to question where the rate may be in 12 to 18 months. BBR will inevitably begin to increase in that timescale and we must now consider that the floor has been reached.
"Therefore, consumers must think about locking in to the attractive fixed-rates currently available – the like of which might not be seen for a very long time. While BBR tracker rates may currently offer slightly better value, consumers must remember that ‘normality’ in terms of Base Rate is much more likely to be around the 4-6% mark, not 0.5%. Were BBR to move up relatively quickly, the best tracker products available now are those which contain a maximum interest cap.
"Our advice to consumers is to understand the current situation is unique and to consider what they might have to pay should BBR rise to a more ‘normal’ level. Some three and five-year fixed rates are available at around the 4.5% mark, a level which many customers should be taking advantage of.
"We are already seeing long-term swap rates on the money markets starting to creep up and it is our prediction that this type of fixed-rate value is not going to last forever. Those adopting a wait and see attitude may ultimately wait too long and therefore consumers should seek mortgage advice as soon as possible to fully understand the value that is available with fixes at present. We understand that in this market no one wants to ‘catch a falling knife’, however, it looks likely that in terms of BBR the knife is now very much in the ground. With BBR at a historic low, now is the time for consumers to secure their mortgage payments at medium to long-term rates that quite simply, will not be available in years to come if ever.”
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