The Halifax has started a campaign for two year fixed rate mortgages. " move to our two-year fixed rate mortgage deal. It'll keep you sheltered from future interest rate rises." it says.
This really is outrageous as the implication is that for the next two years there is great risk of interest rate rises and all will be fine once the two-year rate fix expires. Quite the opposite. They state that no knows what the future has in store but an organisation like the Halifax should have a considered view and clearly doesn't. The considered view should be that rates will be relatively low for the next two years but after that there is significant risk of higher base rates and mortgage rates to counter the inflationary effect of quantitative easing on the economy. Do not be surprised if interest rates rise substantially within a few years time.
Taking a two-year fixed mortgage rate locks you in until the beginning of the most dangerous period for mortgage rate rise potential by which time it could be too late for you to remortgage on a decent rate. Don't believe the Halifax's advertising department - try to get fixed rate mortgages of between 5 and 10 years duration over the next few months. Swap rates may come down a little bit further but there isn't much left to go and swap rates are the basis of fixed rate mortgage pricing.
This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.
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