Get a fixed mortgage rate now – money printing has failed. 

According to an article in The Times Online it is important to go for a fixed rate mortgage sooner rather than later.  Waiting to see how the market shifts could prove costly.  However, is this spin from mortgage brokers looking to stimulate business by focusing on fixed mortgage rates?

The Bank of England has continued with its money printing scheme (quantitiative easing) and around £80 billion has been fed into the economy and swallowed up.  The idea is to stimulate more competitive mortgage deals but this does not seem to have happened in the slightest so far.

A large number of homeowners are currently benefitting from all time low interest rates, but unfortunately those first time buyers and homeowners with little equity are seeing much higher rates, with very little choice.  The main reason being is that the banks have increased fixed rate deals in line with increased SWAP rates because the money the Bank of England has fed so far has not worked.

Ray Boulger, of the mortgage broker John Charcol, says: “There is no evidence whatsoever that the quantitiative easing that has so far gone into the system has had an effect on mortgage availability. It raises the question of where the money is going. You would have expected to see some influence by now.  With no slack in the amount of mortgage funding available and lenders currently having no ability to easily increase the amount of money they have available to lend, the only ways they can restrict demand are the time-honoured methods of putting up their rates or withdrawing products.”

The question is how effective will quantitiative easing be, and as the estimated £125 billion is drip fed into the economy will it actually go where it is intended to?  If it does then the result will be an increase in good competitive deals.  If not and the newly printed money disappears down a black hole then further increasing SWAP rates will be passed through to the deals offered, and it may be worth considering the current fixed mortgage rates available.