Is it time to consider a tracker mortgage?
While all the talk in the UK mortgage market has been of fixed-rate offers there is a growing feeling that tracker mortgages, linked to UK base rates, could be way ahead for the future. The only proviso regarding the success of tracker mortgages over fixed-rate mortgages is the necessity for UK base rates to remain low for the foreseeable future. Despite a general opinion that UK interest rates will rise significantly as and when the UK economy recovers, there is growing feeling that base rates will remain at 0.5% or roundabout this level well into 2010.
There are even some analysts who believe that rates will remain relatively low for the next 2 to 3 years although opinion on this is very much divided. There is no doubt that UK base rates will remain fairly low until the UK recession ends but there is a concern that once the economy does turn there will be a need to increase rates rather quickly to combat the potential threat of inflation. Inflation at this time is no threat, with some believing that deflation is the biggest threat in the short term, but this could change very quickly as we have seen in the past.
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