Switch to tracker now - fix later

ccygirl

I am currently being advised to remortgage in Jan when my current Abbey 4.39 fix ends, to a tracker at 5.98. This is with a view to fixing later after the rates have dropped. My only worry is that the medium - long term fixes won't drop, and I will have been paying more than necessary in the mean time.

Do these rates follow the BOE base rate. My broker seems to think rates will fall due to a pending general election. Does anyone else think this is a good plan.

steview

HI ccygirl,

Personally I think the rates will stay the same tomorrow and then over the next year come down by around 0.5% overall but I'd also be quite keen to know what other people think cos I currently have a fixed mortgage which runs out in March and I was thinking of switching to a tracker myself but not sure I have the courage.

jonewer

You are basically gambling that rates will drop in the short to medium term.

This is possible. No-one knows what will happen to the rates because no-one has a crystal ball.

However you should remember that the bank sets rates based on the inflation outlook. And there is substantial inflation in many sectors, not least the agricultural sector, and with the price of oil already at record highs and looking set to punch clear through the $100 per barrel level, this will have a knock on effect on just about everything else. The inflationary outlook is therfore "on the upside", to use the MPC parlance, which means the pressure to hold or increase rates could well outweigh the desire to cut rates to free up the credit markets.

Its also worth bearing in mind that rates are still rather low by long-term standards.

It is also also worth bearing in mind that Brown has cancelled the election and that he doesnt sit on the MPC in any case.

Your "Broker" or "Mortgage Salesman" as I prefer to call them, seems to me to be full of !!!!!!.