The Money Edit - Should I fix my mortgage now?

Unfortunately there is no easy answer to this question as it will depend on individuals situations and also risk factors. Over the last few months we have seen less people take the tracker rates as the margins between the fixed rates closed, but with the possibility of the base rate dropping next year then there is definitely an opportunity to save money if you are happy with the uncertainty. If you are going to worry every time the monetary policy committee meet then is it going to be worth it.

There is no one size fits all approach that's for sure. Rates do appear to have come down a fair bit since their October highs making new fixed rates a bit more palatable but ultimately it's down to your own circumstances and what ticks your boxes. Are you after certainty? What changes are on the horizon for you personally? How long do you see yourself living in your property for? These are just some of the questions an adviser has to ask in order to tailor something to your particular circumstances. That's exactly why there are thousands of deals on the market at any one time, each one right for someone and their own very individual circumstances.

There are many things that affect a product recommendation, from the maximum budget, and desired exposure to risk/certainty needed by a client long term, to their long-term economic views and expectations moving forward. Currently, there are both 2 year and 5 year fixed rates available that sit below the base rate, so with tracker rates coming at a premium above the base rate if taking one you may be signing up to pay a premium for the short term in the hope it makes more financial sense long term.
Where three months ago lots of our clients were going for trackers with the lower base rate, we are seeing many more go for fixed rates again now with some rather competitive offerings out there now

There are also not just trackers and fixed, there are also discount variable rates out there, some of which smaller building societies are offering at quite competitive rates currently so should also be considered.

There is no binary answer to this question. Predictions are either lucky or wrong, so, deciding when to fix based upon your own or others forecasts carry risks. What is important is that the mortgage is affordable and is fit for purpose, for, example, if you are planning to move in a year it is probably unlikely that a five-year fixed rate is sensible. Don't just look at the headline rate, often lower headline rate products carry higher fees, consider the cost of the mortgage over the term of the fixed rate and include lender and professional fees when comparing. If you have a budget in mind for your mortgage payment then try and work to it, this may determine not only the fixed rate term but the overall term of the mortgage. If you are lucky enough to have savings, can you use those savings to reduce your mortgage or offset the interest you are being charged. Speak to a mortgage adviser who can walk you through the maze of decisions.

If a customer is coming to the end of a current deal the most important thing is that they don't go onto their lender's Standard Variable Rate as this will normally be far more expensive than their current deal.

As to if they should take a fixed rate or a tracker rate mortgage this is a far more nuanced question at the moment. If the customer's budget is tight and they are worried that there could be further interest rate rises to come then I would recommend that they take a new fixed-rate product.

If the customer is potentially looking to move in the near future or if they are willing to gamble that interest rates won't continue to rise then potentially a tracker rate could be better for them. In recent weeks however due lower swap rates tracker rate deals have not been as attractive as they were at the end of 2022.

Despite forecasts of a FED-led recession and falling rates, no one (least of all mortgage brokers) knows where mortgage rates are heading. None of the mortgage brokers out there playing Mystic Meg, knew this was where we would be, one year ago. It is not a mortgage brokers job to predict the future or what risks you should take. It is however their job to raise the different mortgages available and what risks they pose to you personally. For example, I have clients with a tiny mortgage (relative to income), on interest only, who could pay the mortgage off tomorrow if they wanted and could afford for the rate to triple. They can afford to take a gamble on a tracker. Conversely, a family who couldn't afford for their mortgage rate to rise by 1%? They should NOT be gambling on a tracker, even though it seems (ironically) more tempting for them to do so. Don't seek a fortune teller, seek personalised mortgage advice.

This question lacks clarity as each individual's situation varies. If an individual prioritises peace of mind and desires to secure something presently, it may be prudent to secure a two-year fixed rate now and review their options at the end of the term, as long as they are happy with the short-term fixed. However, if they are content with waiting and are interested in observing future interest rates, they may want to consider waiting, particularly if their current deal extends several months into the future. It is worth noting that this quarter has seen a consistent decrease in rates, despite an increase in the Bank of England's base rate, with the exception of a slight increase after mid-February.

Whether you should, or shouldn't fix your mortgage and how long for are very individual decisions, which should be taken based on your specific situation and future plans - a five-year fixed rate might be the perfect choice for one person, but totally wrong for someone else who maybe wants to move house in the next few months. Getting bespoke, tailored mortgage advice is the key to getting the right deal for your needs.

My top tip: don't try and beat the interest rate market. Rates might go down, or a politician could make a speech and send the financial markets into a tailspin and rates soaring, the last thing you want to do is gamble your home on what happens with interest rates. Think about the factors you can control; can I see a need to move home, will I want to borrow more money at some point soon, will I be able to pay a chuck off in the coming years?

Here's the million dollar question - borrowers obsessing (naturally, given the constant media attention) on interest rates could be missing the point. A fixed rate gives certainty and even a relatively large 1% drop in rates may not translate into a substantial saving. The difference of 1% on a £300k mortgage borrowed over 25 years, equates to £150pcm. Will £5 a day saved vs. sitting on a high variable / tracker rate really be a good financial decision? The choice between a 2 and 5 year fixed however is certainly more material as the early repayment penalties attached to a mortgage could be more punitive if it became a factor in your future.

It all comes down to your appetite for risk at the end of the day. Whilst the consensus seems to be that the base rate and mortgage rates might fall slightly by the end of the year, there's no guarantee. If inflation proves to be more entrenched than expected, we could even see rates go higher. Fixing at current rates if it brings peace of mind is certainly worth considering.

The million-dollar question. Should I fix now? If only I had a pound for every time, I heard this. The answer comes down to your individual circumstances, affordability, attitude to risk, views on interest rates, monetary policy and inflation. A great adviser will drill down on these topics with the client and will provide suitable advice as a result of these discussion. For example, a fix would be better suited to a client that wants stability of repayments for a guaranteed period of time whether that’s 2, 3 or even 5 years, has the view interest rates will continue to rise due to high inflation during this period but makes peace with the downside risk that rates may fall during this time.

Its a personal preference after conversing with an adviser ad learning all of your options and the consequences of each aspect. however, I don't see the rates going up again... My fix is up in June, so I hope not!