VICTORIA BISCHOFF: get a great mortgage while you can

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No matter what happens this week, interest rates are only going one way.

Concerns about skyrocketing prices – with inflation now forecast to hit 4% or even 5% – saw speculation about an impending base rate hike peak after the budget.

But even if the Bank of England is slow to press the button tomorrow, it’s only a matter of time.

Threat of rates: For millions of families, their mortgage is their biggest monthly outlay. So any increase, however small, will be painful

Interest rates are at an all-time low of 0.1% since the start of the pandemic.

Before that, they had not exceeded 0.75% since the financial crisis more than ten years ago.

Rumors that in a worst-case scenario rates could reach 3.5% in 2023 are enough to send a shiver down your spine.

Even an increase from pre-pandemic levels will prove deeply unpopular among households that are already feeling the pressure amid more bill and tax hikes.

Yes, it’s true that in the ten years leading up to the credit crunch, interest rates were around 5% on average. And many will remember the days when rates were over 15% all too clearly.

But this backdrop offers little comfort to those whose finances have already been pushed to the breaking point during the pandemic.

For millions of families, their mortgage is their biggest monthly expense. So any increase, however small, will be painful.

Still, it’s important to remember that mortgage rates are still incredibly cheap. And while we may never see a price war on the scale we saw this summer ever again, you still have time to strike a good deal.

Major lenders pulled many of their cheapest offers ahead of an expected base rate hike. But as we report, you can still get a five-year fix at around 1%.

Of course, the lowest rate doesn’t necessarily translate to the best deal; it depends on the lender’s fees and the amount you are borrowing. But it shows that there are still good deals to be had.

So if you’re sitting on your lender’s standard variable offer, contact a mortgage broker today to find out if you can switch to a cheaper offer.

Those on trackers who don’t plan to move in the near future may want to consider a fixed mortgage instead, especially if you don’t have to pay an early exit fee to move out.

If you’ve ever been stuck safely in a cheap fixed-line contract, consider whether you can afford to pay a little more each month.

Increasing the amount of equity in your home will ensure that you are in the best position when you come back to mortgage in the future, when home loans could be much more expensive.

Mortgage rates are unlikely to be this low again for very long. And while there is no need to panic, now is the time to act.

Be festively frugal

It’s usually the week after looking back that I start to seriously think about starting my Christmas shopping. If I don’t organize myself early, I end up buying in a panic, spending a lot more than I need to.

But this year, shortage or not, I’m determined to take it slow.

After the holiday season was all but canceled last year, many families will feel pressured to make this Christmas the best of their lives.

But like a lot of people, all I really want is to be able to enjoy a few laughs (and a drink) with my loved ones.

And with household budgets strained, why go too far? Last year my friends and I decided to ditch the freebies in favor of donating to our favorite charities – a tradition I want to repeat.

I would love to hear your plans for festive spending. Write to me at the email address below.

Warm wishes

Speaking of Christmas gifts, a Money Mail reader from Bicester, Oxfordshire, suggests that with gas prices soaring, energy companies should consider launching a range of gift cards.

It might not be the most exciting gift to unwrap, but I’m sure it would be gratefully received.

Maybe you could go all out and also include a new wool sweater or a fluffy hot water bottle.

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