Fixed or Tracker?

As we approach 2025, the latest interest bank rate cut to 4.75% (November), the lowest level in over a year, gives homeowners and buyers a moment to review their mortgage options. While this is a positive sign, 4.75% is still high compared to the low rates of the past, so it’s essential to weigh your mortgage choices carefully as you plan ahead.

The Impact of a Bank Rate Reduction

Even with this reduction, the 4.75% bank rate means mortgage rates remain relatively high. For those with a variable or tracker mortgage, monthly payments could still feel steep, and the cut may bring only modest relief. However, with inflation more stable and closer to the 2% target, there’s potential for economic stability, which could further soften mortgage rates in the coming months and years.

Fixed vs. Tracker: Choosing with 2025 in Mind

If you’re planning your finances for 2025, consider how each mortgage type fits into your budget and goals. A fixed-rate mortgage offers security, locking in a rate for a set period. This stability can help you budget confidently and protect against any future rate hikes. For those eager to start the year with predictability, a fixed rate could be the way to go.

However, if you think rates might drop again and want the flexibility to benefit from further cuts, a tracker mortgage could be a smart option. Just keep in mind the potential for monthly fluctuations, something to be cautious of if rates increase.

Looking Ahead

Starting the new year on the right foot means setting a clear plan and choosing the mortgage option that best supports your financial goals. Consulting with your mortgage adviser can help you find a rate and structure that aligns with your finances and goals for the future.