Even after providing a sneak-preview of what she’s likely to announce in her Budget, the whole country is still nervously awaiting Rachel Reeves’ statement later this month.
And no group will be on the edge of their seats more than those looking to get their foot on the property ladder, or those considering a new mortgage.
The question ‘should I fix my mortgage before the Budget’ is one I’m being asked on an almost daily basis right now.
Sadly, as with many things in the housing market, there’s no easy answer to this. In terms of why you might want to fix, the upcoming Budget could lead to rising borrowing costs due to higher government borrowing and risk in financial markets.
Lenders may adjust fixed mortgage rates in anticipation of market movements.
So locking in now will deliver certainty. By fixing now you will be protected from potential rate increases and you will at least know how much to put away each month.
If rates fall later, you may still have options to remortgage or switch, though do bear in mind there could be costs.
If your current deal is expiring soon then borrowers whose fixed rate or tracker deal ends soon could face much higher variable rates if they wait.
This also makes fixing a potentially good option.
But there are also many reasons why you might not fix or that you may be better off waiting.The first reason is due to the possibility of interest rate cuts.
If the Bank of England reduces the base rate, variable rates (and possibly fixed rates) could drop, meaning you might overpay if you fix too early.If your current deal runs for a while and you’re not under immediate pressure, waiting could be advantageous.
Fixing early may incur fees or reduce flexibility, especially if you plan to move or refinance soon. Waiting means you won’t be hit by these.
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Finally, a positive Budget reassures markets, long-term interest rates could fall, potentially lowering fixed mortgage rates.
Most of us are expecting a difficult period after the Budget but there’s still time for the Chancellor to pull a rabbit out of the hat and offer a measure which would boost the housing market moving into 2025.