Mortgage borrowers need to be prepared for the affect that a change in the base rate could have on their outgoings, urges mortgage advice broker Unbiased.co.uk.
A rise in interest rates could see mortgage payments increase for borrowers, and there is much uncertainty among consumers about the best course of action to take to shelter themselves from additional outgoings.
To help consumers be prepared for the Bank of England announcement tomorrow, Unbiased.co.uk has asked some experts from the mortgage advice industry for their opinion.
Karen Barrett, chief executive of Unbiased.co.uk, said: "As the monthly interest rate decision approaches many home owners and first time buyers have been left worrying about the effects."
Ray Boulger from John Charcol talks about the two extreme opinions of what will happen to the base rate in the coming months and years, either that it will remain at its record low of 0.5 per cent for some time yet before rising slowly, or that it will shoot up to eight per cent over the next two years.
When it comes to mortgages, he said: "I suggest those trying to decide between a fixed or variable rate should look at fixed rates for at least five years and both trackers and discount rates.
"A two year fix will prove poor value in most cases. In the first scenario a variable rate will be cheaper over the two years and in the second scenario one would come off the fixed rate when rates are much higher and hence either be stuck on a much higher variable rate or only be able to fix at a much higher rate."
David Hollingworth, from London & Country Mortgages, said: "With many expecting interest rates to remain low for some time to come a tracker rate would seem the obvious choice to capitalise on the cheapest rates." But, he warns borrowers to consider how they would cope if their interest rate did rise.
"Either way, borrowers could also consider overpaying whilst rates are low in order to cut their debt more quickly and improve their position for when rates do begin to lift," he added.
Ms Barrett added that it is important for borrowers to understand the potential consequences of the base rate decision. "Seeking advice from a qualified and whole of market mortgage adviser will provide you with the information and help you need," she said.
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