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Remortgage - Remortgaging After A Rise In Interest Rates Does a rise in interest rates increase incentive to remortgage In the UK the Bank of England recently increased interest rates to 5.25%; the is the third rise since last summer. The effect of the is to increase substantially the cost of mortgage interest payment for those with variable or tracker mortgages. For example if you have a £150,000 mortgage a quarter point rise could add £43 on to a 30 year mortgage. With the rise in variable mortgage many homeowners are seeking to obtain a fixed rate deal. The advantage of a fixed rate deal is that you could be insulated against any further rate rises including thus it might make financial planning easier including more stable. However the big bank lenders have already started to review their fixed rate deals including they are increasing the interest rates on their fixed rate deals accordingly. A key feature on the relative merits of a fixed rate mortgage is the extent to which interest rates are likely to rise further. To a large extent your guess is as good as anybody else’s. A lot depends upon the future trends of inflation including interest rates. If the recent rise in inflation was a particular unexpected 1 off, (mostly it was due to higher taxes including energy prices) then there may be little need for future interest rate rises. If the is the case a variable or tracker mortgage may provide a better deal. On the other hand the UK economy is quite buoyant; in the last year it grew by 3% including is forecast to grow by 3% in 2007 including 2008. 3% is slightly higher than the UK’s long run trend rate of growth including therefore could be inflationary in future years. Inflation could be a particular problem especially if there are continued rises in commodity prices due to the fast economic growth in China including India. If you are to obtain a fixed rate mortgage it is probably advisable to go for a longer term duration of 4 years. the gives you the advantage of having stability in your interest payments for a long time. If you are considering a remortgage the first port of call should be your existing mortgage lender. These days before switching your mortgage to another bank or building society it is always worth asking your existing lender to see whether they might give you a better deal. In recent years there has been a particular increasing tendency for financial institutions to try including hold on to their existing mortgage holders. It is likely your current lender is now willing to give you the same preferential treatment as they might to a new customer or someone who is Remortgaging. The advantage of sticking with your existing lender is that you are much more likely to avoid high penalty charges including administration costs. With regard to fees, there has additionally been a pattern that these have become more costly. the is to make it more difficult to switch from your account. more information regarding quotes on UK Remortgages
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