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Fixed Rate Benefits

Tuesday, 12th August, 2014

For those who have decided to purchase property at these low rates with the intention of realising a quick return, the aftermath of the recession has been a good time to buy. With interest rates low, a plethora of cheap properties have been available on the market for those with the necessary capital and appetite to invest.

These investors have benefitted from five years of low interest, assuming they have taken out a tracker mortgage or similar product that reacts to changes in the base rate. Steady lows have meant they undoubtedly saved on mortgage costs, while they have also witnessed significant increases to capital values.

While asset prices may continue to rise, the change to interest rates should lead investors to consider a re-think on the financial products they purchase. If their circumstances are appropriate, fixing a rate for a suitable period could allow a certain amount of security in the light of some of the uncertainty that lies ahead.

Although we know that rates will rise, we don't know by how much - even though logic dictates an incremental increase at first. We also don't know how frequent any gradual hikes may be. In five years, we could be talking about much higher rates. In fact, rates that are five times where they are now, if Mark Carney's latest statement is to be believed.

For those buying now, fixing their mortgage rate for five years will take advantage of the current low rates, which could result in better returns. In the short term, they may pay more per month, however, as rates begin to rise fixing the rate may reap dividends in the form of lower monthly payments. 


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