Most mortgages are lent over the medium to long term (15 - 30 years) and over that time period the cost of borrowing set by the banks and/or the Bank of England usually varies. A mortgage where the initial interest rate might have been 4 - 5% might slowly (or suddenly!) become 6 - 7 % (or more - or less). In the 1980s, mortgage rates in the UK sky rocketed into the mid teens, leaving many with huge mortgage repayments and a real headache.
As the name suggest, a ‘fixed rate mortgage’ is a mortgage that has an agreed rate of interest fixed at the start of the loan. It won’t vary in line with the Bank of England Lending Rate, LIBOR or the mortgage company’s Standard Variable Rate (SVR) for the fixed rate period.
A fixed rate mortgage offers certainty to the borrower and can be attractive to those borrowers on tight budgets or in jobs with no prospect of significant growth in salary in the foreseeable future. They are also worth considering when interest rates are historically low, although the downside is that you could pay a higher initial rate on a fixed rate mortgage than you would on a variable rate.
Most borrowers interested in a fixed rate product will take an initial fix in interest rates of between one and five years, with the loan then reverting to the lender’s SVR or a rate linked to LIBOR or the Bank of England Base Lending Rate.
It is worth noting that fixing a rate also means that if mortgage rates fall, you are still paying the original (higher) rate. For this reason some people will seek out capped rate mortgages, which will generally protect you against rate rises but still allow the rate to fall with the market.
Whatever you decide, it’s best you choose a product that best suits your needs at the time and for the foreseeable future.
For more information contact us or speak to an adviser on 01628 507477.
Related article:
Recent posts
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
9 days ago
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
9 days ago
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
The most inexpensive areas for first time buyers
22 days ago
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.
Tips to help you get onto the property ladder
22 days ago
Are you looking to purchase your first home but unsure where to begin? Here are some tips to get you started.
Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.
Best UK Mortgage Rates this Week
18 Mar 2025
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Stamp Duty Rush as Deadline Looms
17 Mar 2025
According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.
More information
Trusted by
