Should You Lock in Your Mortgage Rate Now or Wait for Base Rates to Drop

Money Tips Daily by Charles Kelly, former IFA and author of

As the Governor of the Bank of England, Andrew Bailey, tells the Guardian that the Bank could be a “bit more aggressive” at cutting borrowing costs, depending on the rate of inflation, the question borrowers are asking is should I opt for a fixed rate mortgage rate or wait until base rates fall?

The Bank reduced base interest rates from 5.25% to 5% in August, the first drop in cut in four years. However, Mr Bailey warned that the Bank was monitoring developments in the Middle East "extremely closely", as any movement in oil prices that could fuel inflation.

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With rising interest rates in the UK, many homeowners are asking, "Should I fix my mortgage rate now or wait until base rates fall?" This decision can have a significant impact on your monthly payments and overall financial situation, so it’s crucial to weigh the pros and cons.

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The Case for Fixing Your Mortgage Rate

Fixing your mortgage rate can provide peace of mind, as it locks in your monthly payments for a set period—usually 2, 5, or even 10 years. This means that if interest rates continue to rise, you won’t be affected. It’s a popular option for homeowners who want stability and to budget more effectively.

Current rates may seem high compared to a few years ago, but they could rise even further. By fixing now, you can avoid potential increases in mortgage repayments. Additionally, fixed rates offer protection against market volatility and economic uncertainty.

The Case for Waiting

Some experts predict that base rates may fall in the coming years, especially if inflation eases and economic growth slows. If this happens, waiting could allow you to secure a lower mortgage rate in the future. However, this strategy carries risks—if rates rise instead, you could end up paying more.

Ultimately, the decision depends on your financial situation and risk tolerance.

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