Mortgage borrowers 'should not get used to low base rate'

There is a danger that mortgage borrowers could consider the current low base rate to be the norm, it has been claimed.

Interest rates have been kept on hold at 0.5 per cent since March 2009, but cannot "stay that way forever", warned Paula John, editor at Your Mortgage.

While the Bank has kept its base rate at this historic low, mortgagees with tracker and standard variable rate deals have been paying far lower monthly repayments than prior to the recession.

"We are in extremely unusual financial circumstances at the moment and these rates are being kept artificially low in order to help the recovery," she said.

Ms John noted that there is only one way interest rates can go as the economy begins to recover – and that is upwards.

"Anyone who is complaining about finding mortgage rates around five per cent, really shouldn't be; if you can fix your rate for five per cent then that is a pretty good deal," she added.

In historic terms, five per cent is "long-term good value" for a mortgage," the expert said.

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2010-08-25 12:00:06 © Moneyextra.com