Are interest rates likely to go up a lot this year?

[passionberry]

This is very boring but I can't seem to get an answer from the bank on what to do for the best:

We are on a fixed rate mortgage of 6.596% which is due to come to an end in June.

The bank have offered us a new 2 year fixed rate deal at 5.49%

The problem is that we are planning to move house within the next year so would obviously have to look at re-mortgaging - and it would cost 3% of our outstanding balance to get out of the fixed rate deal.

If we don't fix - the bank would put us on their standard variable rate of 4%. We would then organise a new mortgage deal when we are ready to move house.

But what if interest rates go up this year? If they did, how much could they rise by?

5.49% fix seems high to me- why don't you shop around

personally I'd go on variable - BOE at 0.5% at the moment but probably likely to rise

www.moneysupermarket.com/mortgages/

Normally if you are on a deal for a fixed period of time you can move your mortgage to a new property so as long as you are going up in size rather than down it shouldn't prevent you fixing. However I also think that sounds like a high rate.

I've just been on moneysupermarket but no one wants to offer us a mortgage!! It's a 95% mortgage and we are due to pay it off in 32 years - is that really bad?? We could potentially pay a lump sum off it to get it down a bit - maybe that would be a good idea?

HouseWifeOfOrangeCounty - I think we will be able to move the mortgage if we fix again - I just wonder if it would be better to go onto the SVR 4% for a bit as it's a lot cheaper.

standard mortgage term is 25 years but you can extend if needed - 95% quite high so you wouldn't get best deals

If you want to try and pay off a lump sum, make sure you pick a mortgage without early repayment penalties. Unfortunately, as activate says you are unlikely to get a great deal if you are wanting to borrow such a high percentage of your property's value.
Unless you have to move, you would do better to try and pay off a larger sum of your mortgage so that when you do move in future you aren't wanting to borrow such a large amount against the value of the house. You are likely to then get a much better deal.

Interest rates could well go up towards the end of q3 this year but also so might inflation. I think the thing that will have the most impact on the housing market is, like you say, decrease in mortgage offers/deals. Personally, I would put some equity towards your 95% mortgage if you have it, esp at the moment whilst interest rates are rock bottom and there is nothing to be made with savings.