There are around four million people in the UK that are on ‘standard variable rate mortgages’ which go up or down in line with interest rates set by the Bank of England. Standard variable rate mortgages tend to be more expensive. For example with a base rate at 5.5%, most standard variable rate deals will be around 7.5% or higher.
With the best fixed rate mortgage deals at around 5% it does not take a financial genius to see there are large savings to be made, on a £100,000 mortgage you could save around £2000 a year.
What fixed rate mortgages offer is that you know what your monthly payments will be for the entire time of the fixed rate period so you can budget for the future. The only down side of a fixed rate deal is that should interest rates drop you would still have to pay the same rate until your deal finished, or pay an expensive early redemption charge should you move your mortgage during this period.
With the current sate of the economy it is predicted that there will be a further interest rate rise in the near future.
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