Mortgage interest rate usually changes instantly due
to many factors including the status of the economy. This sometimes
leads to the increase or decrease of interest rates.
Mortgage interest rates are closely related to the
base rate which is set at the beginning of the month by the Monetary
Policy Committee of the Bank of England. They are responsible in the
fluctuation of rates geared towards maintaining a constant rate or
put the interest rates at its lowest.
The standard variable rates being offered by most
mortgage lenders are mostly between 1 to 2 percentage points more
than the base rate. Assuming the prevailing is base rate is 5%; as a
result the standard variable rates would be between 6% and 7%. This
means to say that once the base rate goes up, the mortgage rate also
goes up with similar amount.
Many mortgage lenders today provides special offer for
their new clients good for two to five years. You may also choose to
pay in advance the early repayment fee so you can just move your
mortgage prior to the expiration of the special offer.
A fixed rate mortgage can be chosen if you have very
limited budget or if you want to be safe from the effects of an
increase on rates. Fixed rate mortgage is fixed and is not affected
with any inflation rates. The rate can be fixed for a period of two
to five years depending on the consumer's decision. For most
homebuyers, fixed rate mortgage is the most popular choice.
Another option for homebuyers is the discounted rate
mortgage. The discount starts at 1% or even more based on the
standard variable rate. The discount will also be affected once the
base rates moves.
Meanwhile, capped rate mortgages are one of the rarest
rates being used in the mortgages industry. Basically, this is also
considered as variable mortgage the only difference is that there is
a guarantee that the interest rate will not increase on a certain
level. This type of mortgage is more costly compared to other
Mortgage rates are greatly affected by the movement of
the base rate. Most lenders have the prerogative whether to pass the
interest rate or if they increase the rates. This has resulted to
the development of a tracker mortgage. The tracker mortgage is used
to keep track of any movement on the mortgage business.
Keeping track on the trend is very important
especially on the economy because it also affects the mortgage
interest rates. If you are updated with the prevailing trends, you
are always at the advantage side once there is a decrease on
If you are having difficulties in finding the best
mortgage that suits your demand, you can always have the option to
secure a mortgage quote from any of the well established lenders.
These mortgage quotes serves as your basis to come up with the best
decision on your chosen mortgage loan.
It is better to compare all available options prior to
entering into any loan contract. You don't want to end up suffering
from paying very huge interest rates and result to lose of property
because of a wrong decision.