Finance types! If you were a first time buyer would you get a tracker or a fixed rate mortgage?

[Ewe]

Just curious as to what the consensus is on the best type of mortgage to get at the moment.

Of course the only way for interest rates to go is up but how quickly is that likely to happen and what is the worst case scenario?

Please help!

And how long could it potentially take for interest rates to raise to 4-5%?

If you are worried then shop around for the best fix you can find. We just took out a new mortgage and the fixed rate was lower than the variable offered. Very as rates cannot exactly go down!!!!

In terms of the questions you have about interest rates the answer is that no-one, not even the governor of the bank of england knows. Be careful about listening to people who pretend to know, because there is a lot of nonsense spouted (not least on here) about this subject.

That said, it is true that they can't really go down but they can stay at the same level. Currently with low inflation there is no reason for them to go up in the very near future. If this low inflation leads to pay freezes for many (and it is) then this should keep inflation at bay. However, this is by no means a given because there are other factors which can influence inflation. The bofe's brief is that it must keep cpi below 2%, it is currently 1.6%.

How long it will be before they do go up? Well, I'm as likely to get the lottery numbers right on Saturday

The danger of a Tracker mortgage is that if the Bank of England raises the Bank Rate then your Tracker Rate wil go up.

Hisorically Tracker Rates were only about 1 - 1.5% higher than the Bank Rate. Now the 'spread' or difference between Bank Rate and Tracker rates is about 2.5 - 3.0% so if Bank Rate goes up you will be paying for a very expensive mortgage.

In fact I would not buy a house now but if I did I would go for a Fixed Rate mortgage.

There is talk of central banks all over the world being forced to raise their official Bank Rates next year but others say it will not happen for several years.

If was a first time buyer I would wait this quarter will be very interesting in my opinion, hang on until the spring may save you hundreds of thousands in interest.

Right now I would get a fixed rate if I could get a decent rate.