17th July 2023

Mortgage rate uncertainty

Cordelia Smith

Associate

Given the continuing uncertainty about mortgage rates (and the huge number of cheap two-year fixes due to end this year), this article in the Guardian offers some interesting thoughts about how best to use any spare cash.

Should you overpay your mortgage or save your money?

To summarise:

Rising interest rates have led to an increase in mortgage payments, as homeowners look to reduce their debts and avoid bill shock when their fixed-rate deals end.
However, savings rates are also at their highest levels in years, so it’s important to weigh up the pros and cons of overpaying your mortgage before making a decision.
If your mortgage rate is close to or higher than a savings rate, then it is a good idea to overpay. However, if you can get a higher return on your money by saving it, then this may be the better option.
Ultimately, the decision of whether or not to overpay your mortgage is a personal one, and there is no right or wrong answer.

The choice between overpaying or saving isn’t necessarily straightforward – time to do some sums!