Q. Should I fix my mortgage rate or not?
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Obviously, this is a question best addressed to a reputable mortgage broker – although, strictly speaking, even they aren’t meant to advise you, but simply set out the alternatives and leave it to you to decide.
That said…the whole point of a fixed rate mortgage, of course, is that it provides the borrower with a degree of certainty. This is therefore going to be particularly important for first time buyers, who perhaps need to borrow right up to the current limits of their affordability. Then there are those double-income households where one partner is planning to take perhaps 5 years out to bring up a young child, or families looking to offset the additional costs involved in a child going to university – which will normally be for a period of 3 years.
However, while I don’t know your individual circumstances, from the tone of your question I would guess that like a lot of people your main interest in fixed rate mortgages is simply to try and lock in current rates. After all, it’s pretty obvious that they are going to start going up at some stage.
So, the question resolves itself into one of timing. Do you fix now (perhaps at a higher rate than you are currently paying), or wait just a little longer. And that, I’m afraid, is something neither I nor anyone else can really help you with. The simple fact is that no-one knows for certain when rates are going to start going up, or by how much. However, if you pushed me, I would probably go for a fix sooner rather than later, not least because current deals will disappear overnight once rates start edging up. You might end up paying more for a while, but unless you’ve got nerves of steel, or unusually deep pockets (or both), it’s probably worth it for the peace of mind.
One other point you should consider however is the fact that there are almost always fees involved in switching mortgages and/or lenders. So, if you are in the fortunate position of having a fairly small mortgage, those fees could actually be disproportionately high.
But when all’s said and done, I really think you need to talk to your friendly neighbourhood mortgage broker – preferably one who offers “whole of market” coverage.