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Fixed rate escape branded “false economy”

Buying into a fixed rate deal to escape the threat of further rate rises could be a false economy, warns broker My Mortgage Direct.

It says that customers may find opting for a fixed rate a necessity to avoid getting into financial difficulties after the Bank of England upped the base rate to 5.25%.

However, My Mortgage Direct predicts sticking it out with a good discount or tracker could prove the sensible option in the longer term until more attractive fixed rates are back on the table.

Cath Hearnden, director of My Mortgage Direct, says: In order to capitalise on last weeks base rate rise, many lenders have rapidly withdrawn their best fixed deals and are replacing them with more expensive products.

With one or two further rate rises widely predicted to follow in the near future, we expect this trend to continue and advise caution for anyone considering switching lenders to mitigate rising mortgage costs.

Of course, the time to fix is when a rate rise is a possibility, not a certainty, thats when the best deals can be snapped up. As always, there will be those who bolt the stable door too late.

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