What are the pros and cons of fixed-rate mortgages?
The main advantage of a fixed-rate mortgage is that it protects you from future rate increases for a set period of time. It also allows you to budget more effectively as your repayments will be the same each month. However, fixed-rate mortgages are currently significantly more expensive than trackers that are linked to the Bank of England base rate. Indeed, at the time of writing, fixed-rate mortgages have just rapidly increased in price. Many people were choosing to fix while rates were relatively low, but this was not ideal for lenders as they need to keep a balance between customers on fixed and tracker rates to mitigate the risk of their own wholesale costs rising. As Ray Boulger, mortgage expert at John Charcol (www.charcol.co.uk) explained, fixed-rates have risen as lenders respond to increased demand by pushing up rates even more to deter business. So, fixed-rate mortgages are more expensive, but less risky.
