Experts agree to disagree on the best deals.
TELLING the future has always been a bit tricky and not many people are any good at consistently getting things right. Nostradamus could apparently tell the future but his writings were so vague and incomprehensible that they could be interpreted to mean just about anything.
At the moment economic forecasters keep coming up with their own predictions for the future regarding what will happen to the economy and therefore what will happen to interest rates.
You might think, as they are all experts, that they would all be saying similar things and there would be a consensus as to what is going to take place.
Sadly life is not so simple. As an example of this Ernst & Young, a big accountancy firm, has produced an economic report that suggests that the Bank of England base rate will stay at the historically low figure of 0.5 per cent until the end of 2013.
Ok, if that was the case you would take out a low rate tracker deal and your mortgage payments would remain low. On the other hand, Andrew Lilico of the economic think tank "The Policy Exchange" has warned that interest rates could rise to 8 per cent by 2012 if inflation increases!
If he was correct then a tracker rate would just keep going up and so would your mortgage payments but a long term fixed rate would stay the same and end up saving you a small fortune.
So, not much difference between 0.5 per cent or 8 per cent as a prediction for interest rates then! So how do you deal with this uncertainty? Either you decide you agree with one camp or the other and take out a rate that looks best value on that basis or you could split your mortgage between two products and have part of your loan fixed and part of it as a tracker rate.
One thing worth considering is that if you opt for a tracker rate without penalties and then rates start going up at least you could change to a fixed rate then, at fairly low cost, although the fixed rates would have increased.
If on the other hand you opt for a long term fixed rate and rates remain low it will cost you a hefty penalty to get out of the fixed rate deal.
Decisions: Speculation as to which direction the Bank of England base rate is heading is divided