Mortage Rates Possibly At Lowest Point

There is speculation amongst mortgage advisors that fixed rate mortgages may have reached their lowest point with many anticipating rises in the Bank of England base rate.

Inflation, as measured by the Consumer Prices Index, is running much higher than the Government's target of 2% and in fact hit 3.7% in December.

Chief UK economist at IHS Global Insight, Howard Archer, said: "There is a growing likelihood that interest rates will rise before mid-year."

Whilst the base rate has been at an historic low of 0.5%, millions of people have benefitted from their bank's standard variable rate (SVR).

While some are paying only 2.5%, the average SVR is now 4.79%. For those fortunate enough to have at least 20% equity in their property, they could choose to fix for two years at as little as 3.49% with HSBC, which comes with a £399 fee. This would mean monthly repayments of £750 based on a £150,000 mortgage.

For those with even greater equity (over 35%), there are even cheaper fixed rates available of 2.65% with First Direct, which comes with a £999 fee. This would mean monthly repayments of £684 on the same size mortgage.

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