Is it a Good time to Get a Fixed Rate Mortgage?

In short no. The reason is that interest rates are likely to peak at 6%. With inflation forecast to fall in 2008, there will be little justification for increasing nominal interest rates above 6%. In fact, if RPI inflation does fall to 2.6% as predicted, nominal interest rates maybe able to fall. see interest rates 2007-08

Because of the high levels of debt in the UK, recent interest rate rises are likely to have a significant impact. However, it is often worth remembering that interest rates can have a time lag of upto 18 months. Therefore, the previous interest rate rises will have an increasing impact in the future.

Current fixed Rate mortgage deals

Woolwich 2-year fixed rate

• 5.99% until 30 September 2009, then for the remaining term Barclays Bank Base Rate + 0.95%, currently 6.7%. The overall cost for comparison is 6.9% APR. Application fee: £995. Borrow up to 80% of the value of your home.

• By Contrast the Woolwich variable tracker mortgage is base rate + 0.35% Giving an overall cost for comparison of 6.9%.

However, I predict base rates will start to fall next year, so the variable tracker mortgage will be even more attractive in the future. [1]

• Fixed Rate Mortgages
  
• Best Fixed Rate mortgages in UK

[1] Bear in mind I am an economist so my prediction may not be without its failings.