Need a new mortgage? It's your call

Need a new mortgage? It's your call

If you have a mortgage you are happy with, be very thankful - because trying to find a new deal has become a "nightmare". With bank share prices falling faster than Gordon Brown's approval ratings, and the economic predictions for interest rates seemingly changing on a daily basis, you almost need a degree from the London School of Economics to work it out.

Just a few weeks ago, many experts were advising those switching mortgage to go for a base rate tracker because interest rates were on a one-way trajectory downwards. This week, however, some economists were predicting rates now look set to rise. The reversal has put fixed-rate deals very much back in favour - although how long that will last is anyone's guess.

Another problem faced by consumers is that the mortgage market has become somewhat disconnected from base rates set by the Bank of England. Many of the best deals are only available from the banks direct, meaning consumers have to shop around.

Richard Morea, technical manager at the Bath-based broker London & Country, says: "It's a bit of nightmare - rates are all over the place, and it's changing on an almost daily basis. Some banks have put up the price of fixed-rate mortgage rates this week while others have been reducing them. It's very hard for consumers at the moment."

He advises anyone who needs to remortgage to start looking as early as possible - up to six months before their existing deal ends. He also confirms that.....continued below

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most customers are choosing to fix in the face of continued economic uncertainty. "The longer-term deals are now starting to look very attractive. Abbey has a five-year, broker-exclusive fixed deal for those looking to borrow 60% or less of their home's value, which is at a very attractive 5.87%. The fee is £1,499 - but it's only open until 4pm tomorrow (June 15)."

For two-year fixes, he says First Direct's 5.49% still can't be touched (up to 80% loan-to-value), though this is only available direct from the HSBC-owned bank. It comes with some hefty fees, totalling £1,500.

Melanie Bien, spokeswoman for broker Savills Private Finance, agrees it is very confusing for consumers at the moment. She says whether you want to fix or risk riding the interest rate rollercoaster with a tracker "is up to the individual's personal circumstances".

"Swap rates are on the up, meaning that the best fixed-rate deals won't be around for long. Householders need to move fast once they've made a decision." She, too, favours the First Direct deal, but warns it is liable to be closed if the bank is deluged with applications, as it was previously.

m.brignall@guardian.co.uk

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