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How 5 Year Fixed Rate Mortgages Bring Peace Of Mind
If you, like many, have enjoyed a period of low payments on your variable rate mortgage but are now concerned about potential increases in interest rates, then you may well have started to consider the possibility of fixing your mortgage to avoid potentially sharp and uncontrollable increases in your monthly mortgage payments. Variable rate mortgages are great whilst interest rates are low or falling, but pose a significant financial risk in a rising rate market.
There are various types of fixed rate mortgages, offering fixed rate payment stability for differing periods of time. Many people are considering medium term fixed rate products such as 5 Year Fixed Rate Mortgages for the simple fact that they offer medium term peace of mind, stability of payments and the ability to budget effectively. A 2 or 3 year fixed rate mortgage is seen by some people as simply being too short a period of time, whereas 7 or 10 years fixed is seen by many to be too long. So to gain medium term peace of mind many opt for 5 year fixed rate mortgage deals, to hit the right balance.
The tricky part for most consumers is anticipating how the rates will change during the length of the mortgage. The Bank of England is responsible for setting the Base Rate, which is 0.5% and has been for two years. This is a record low, so it is only logical that those rates will rise eventually. Many financial experts are expecting rates to start increasing over the upcoming six months. Everyone agrees to that general time frame but there are various theories about how high they will get and how long they will stay there.
The Base Rate of Interest is set by the Bank of England, who review interest rates each month. The Monetary Policy Committee vote whether to leave the Base Rate at its current level, increase or decrease it. The main driver of this is the rate of inflation, which the Bank of England is supposed to keep at less than 2%. Currently it is well above 2% and interest rates are being held artificially low in order to prevent further economic meltdown during an on-going period of stagnation and recession in the UK.
It has been felt that an increase in interest rates over the last 3 years would have caused more harm than good to the economy as a whole, so the rate of inflation which is usually the primary driver has been secondary. However, now it is felt that we are over the worst of the recession, and with inflation closer to 4% than to 2%, it is felt that the time is coming when the Base Rate will have to rise back up to its more traditional level of between 4% and 6% helping to push back down the rate of inflation.
So if you are concerned about potential increases in interest rates and currently have a variable rate mortgage, you should start to consider the different type of fixed rate mortgages available. If it is medium term stability of payments you are after then you should consider 5 Year Fixed Rate Mortgages as a great way to gain medium term peace of mind in an unstable and unpredictable market and economy.
There are various types of fixed rate mortgages, offering fixed rate payment stability for differing periods of time. Many people are considering medium term fixed rate products such as 5 Year Fixed Rate Mortgages for the simple fact that they offer medium term peace of mind, stability of payments and the ability to budget effectively. A 2 or 3 year fixed rate mortgage is seen by some people as simply being too short a period of time, whereas 7 or 10 years fixed is seen by many to be too long. So to gain medium term peace of mind many opt for 5 year fixed rate mortgage deals, to hit the right balance.
The tricky part for most consumers is anticipating how the rates will change during the length of the mortgage. The Bank of England is responsible for setting the Base Rate, which is 0.5% and has been for two years. This is a record low, so it is only logical that those rates will rise eventually. Many financial experts are expecting rates to start increasing over the upcoming six months. Everyone agrees to that general time frame but there are various theories about how high they will get and how long they will stay there.
The Base Rate of Interest is set by the Bank of England, who review interest rates each month. The Monetary Policy Committee vote whether to leave the Base Rate at its current level, increase or decrease it. The main driver of this is the rate of inflation, which the Bank of England is supposed to keep at less than 2%. Currently it is well above 2% and interest rates are being held artificially low in order to prevent further economic meltdown during an on-going period of stagnation and recession in the UK.
It has been felt that an increase in interest rates over the last 3 years would have caused more harm than good to the economy as a whole, so the rate of inflation which is usually the primary driver has been secondary. However, now it is felt that we are over the worst of the recession, and with inflation closer to 4% than to 2%, it is felt that the time is coming when the Base Rate will have to rise back up to its more traditional level of between 4% and 6% helping to push back down the rate of inflation.
So if you are concerned about potential increases in interest rates and currently have a variable rate mortgage, you should start to consider the different type of fixed rate mortgages available. If it is medium term stability of payments you are after then you should consider 5 Year Fixed Rate Mortgages as a great way to gain medium term peace of mind in an unstable and unpredictable market and economy.
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