During 2007, interest rates have gradually risen to their highest levels since March 2001. As of July 2007, the Bank of England interest rates stood at 5.75%, after rising a staggering five times since August 2006. When you pair that fact with another major economic event, namely inflation rates rising above 3%, homeowners and potential homeowners should be wincing under the financial strain. Fixed rate mortgages should therefore look appealing at the moment.
With economic crises occurring all over the world, the global economy is looking anything but stable at the moment. As a result of the interest rate rises in the UK though, individuals that do not have fixed rate mortgages have seen their mortgage payments rise by anything up to £20 per £100,000 a month since August, with that total increase being much more since the beginning of the year. Although this amount ay not sound like a lot, it can put strain on individual households and send some into financial difficulty.
Fixed rate mortgages may provide the solution to this problem. The mortgage rate is fixed for a period of time, which is usually one, two or three years, although a few providers do offer up to five years. There are often penalties if you do switch provider during the contracted period. However, fixed rate mortgages mean that you are never a victim of rising interest rates and you can guarantee your monthly repayments.
Fixed rate mortgages have their distinct advantages over other kinds of mortgages purely because you know exactly where you stand. However, you should make sure that the fixed rate mortgages deal you choose is the best possible option for you because once you are in a fixed rate mortgages contract, it will cost you to get out!
http://news.bbc.co.uk/1/hi/business/6272776.stm
Jason Hulott is Business Development Director at UK Mortgages service, PolarMortgages. Visit Polar Mortgages now for more information about UK mortgages and remortgages
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