Capped rate mortgages not offering good value, says Moneyfacts
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Capped rate mortgages are not offering consumers good value in the current economic environment, according to Moneyfacts.co.uk.
It says rates on capped deals are typically around 0.50% higher than the equivalent variable rate deal, and with the base rate unlikely to rise significantly over the next few years customers would be better off going for a fixed rate deal if they are looking for security.
Michelle Slade, a spokeswoman for Moneyfacts, says: “While capped rate mortgages are a good idea in principle, in the current market borrowers are unlikely to ever hit the cap and would likely be better off opting for a variable rate deal.
“Recent figures show the UK economy is not recovering as well as the Monetary Policy Committee would like and bank base rate is predicted to remain at its current level until next year, when it is only expected to rise very slowly.”
Moneyfacts data shows the lowest two-year variable rate available is 1.90%, while the lowest capped rate is 2.49%, capped at 4.39%. The base rate would have to increase by 1.90% during the term to hit the cap in this instance.
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