Analysts are anxiously looking at the latest economic statistics to see whether inflation will come within the Government's targets sooner rather than later. For the answer to that question will indicate whether interest rates are likely to rise again.
Unfortunately, the latest figures have been contradictory, with falls in unemployment hinting at inflationary pressure but pay figures suggesting that pressure may be under control.
The pessimistic view is that we might have another interest rate rise to endure. The optimistic view is that interest rates have peaked. The really optimistic view is that interest rates will fall over the next three or more years as Britain tries to bring its rates more into line with Europe before joining EMU.
Those expecting a fall in mortgage rates will have to wait. Only a fortnight ago the second and fourth largest building societies - Bradford & Bingley and Yorkshire - increased their variable base mortgage rates by 0.25% to 8.5% for Yorkshire and to 8.7% from Sunday for the B&B. This followed the June rise in Bank of England base rates, so any change could take a while to feed through to borrowers.
Fortunately there are now variable rates, discounted or standard, rates for 100% mortgages or for first-time buyers, and fixed and capped rates for the short or medium term.
Fixed rates are attractive if they are less than the standard variable rate and less than you expect those rates to be in the medium term. Otherwise, it is worth opting for the largest discount, which is guaranteed to be less than the standard rate.
There is a limited variation in the level of rates for fixed-rate mortgages and most lenders provide fixed-rate loans up to five years, though 10-year terms are also on offer. As the fixed term lengthens, so the interest rate will rise. These offers can be withdrawn without notice.
If the loan is repaid within the fixed-rate period, a redemption fee is charged, which is usually equal to six months' gross interest. With capped mortgages, the upper limit is fixed but the rate can fall when interest rates eventually do.
Discounted rates also fall within a close band. Borrowers who prefer a lump-sum return can opt for a cashback mortgage.
Endowment mortgages are essentially regular savings policies over a specified term, which gain their growth from the investments made by the insurance company. The value of an endowment policy as an investment lies partly in levelling out fluctuations in the stock market.
But the recent large drop in stock market values raises the question of whether more falls are on the way, and this is a more difficult one to answer than the future of interest rates. Endowments, too, mean higher monthly costs which can prove difficult in the early years, but the return at the end of the mortgage period should be greater.
Although rates match each other closely, it is worth comparing other concessions such as free valuation, arrangement fees and loyalty payments. Borrowers must consider the longer term, looking at the prospects of a lender giving them another special mortgage option when the first expires.
Among the questions to ask are whether the mortgage can be paid off early without penalties, whether the lender will give an immediate answer on how much they are willing to lend, if borrowers can obtain the best mortgage rate without having to buy other products, and if the lowest mortgage rate is readily available to all borrowers.
As well as the type of mortgage there is the question of how interest rates are calculated. Most are calculated yearly but more frequent calculations save money. Yorkshire Bank, for example, calculates interest daily.
In recent years more flexible mortgages have been introduced to suit employees whose pay is made up of a larger proportion of bonuses and self-employed people whose incomes may vary from year to year.
Borrowers who can change the frequency of payments or contribute lump sums towards their mortgage gain considerable savings in interest and the advantage of reducing their financial commitments ahead of schedule.
Alternatively, flexible mortgages allow payment ''holidays'' for those on career breaks. Some banks also offer loans which let borrowers withdraw overpayments as and when they wish.
Other flexible mortgages are designed to help first-time buyers, with repayments in the first few years limited to the loan interest and a premium for convertible term assurance. The idea is that the income saved can be used to pay for all the other expenses of moving into a new property.
In choosing the amount to borrow, housebuyers - first-time buyers in particular - must calculate carefully, allowing enough for all the various fees for the survey, the mortgage arrangement fee, the conveyancing, and moving.
Lenders who offer 100% mortgages are becoming more difficult to find and are becoming more selective. Taking out a 100% mortgage will almost certainly mean a higher interest rate than for a 95% one.
The rates for a 100% mortgage are usually at least 0.5% more expensive than the standard mortgage rate.
Borrowers can sometimes benefit from a discounted rate at the start, although the difference in the discounted rates on 100% and 95% mortgages could be 1%.
One solution to this has been developed by Abbey National Mortgaging Finance. ''The deposit is the main issue,'' said Ian Mulholland, mortgage consultant with Glasgow-based First To Finance. ''Most first-time buyers do not have the deposit.
''Abbey National Mortgaging Finance will pay a 5% deposit on the house in the form of a cashback. Normally this is paid 14 to 28 days after completion, but Abbey Finance will pay the 5% on the date of settlement.''
That means that the first-time buyer can pay the lower rate on a 95% mortgage, a lower indemnity guarantee - a premium which protects the borrower and is added to the loan - and a lower arrangement fee. ''I haven't done a 100% mortgage now for 18 months,'' said Mulholland.
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