Not a few UK professionals and homeowners are wondering if fixed rate mortgages are the better option amidst the tough conditions in the market today. With the volatility of the situation and the lack of clear indicators on the performance of the economy in the near term, it would be very difficult to hazard a guess on how the market will play out in the next few months. It was less than a couple of years ago when so-called market gurus and financial experts were sounding off the alarm that interest rates are poised to hit the ceiling.

Would it have made any difference at all if we have heeded their call and gone for the fixed rate mortgage, which is the logical choice then, instead of the variable rate mortgage? You see, the issue whether we go for the fixed rate mortgage or not will have to be decided ased on two critical variables. Firstly, you have to assess your aversion to the risk associated to having a fixed interest rate. Secondly, you need to assess the severity of such risk and how it may impact on your financial future.

If you have enough financial leverage, then the decision to go for the fixed rate mortgage will really depend on your personal preference. However, if you don’t have sufficient finances to fall back on and you cannot afford higher mortgage payments beyond what is prevailing in the market, then you may have to go for variable rate mortgages. Aside from this, you should explore the possibility of limiting your exposure.

With regard to the second concern, your decision to go for the mortgages with fixed rates or variable rates will depend on their difference. If the variance is not significant, then you are on the right track if you go for the fixed rate instead of the variable rate option, even if you are averse to the risk associated to such products.