Deciding between a fixed or floating rate mortgage is always a tough decision and a bit of a gamble either way.
But in the clearest sign yet that interest rates are on the way up, the Bank of England’s Richard Sharp has just told MPs he would be tempted to fix right now.
“We have had a period for 20 years of declines in interest rates – in that sense this nation has benefitted from being short the curve,” Financial Policy Committee member Sharp told MPs on the Treasury Select Committee, explaining that a floating rate has been the best option in recent decades.
But what to do now rates are close to zero and have been stuck here for years? Should borrowers float for the rock bottom rate now, or pay a bit extra to fix but have the security for years to come?
Sharp says rates have nowhere to go but up.
“Now rates are close to the zero rate bound, so you've got to make a judgement about the future. Mine is, this would be a good time,” he said, recommending a fixed rate mortgage.