Should you fix your mortgage rate now?

The new year has brought some relatively good-looking mortgage deals to the market. But should you go for a variable or fixed rate deal? Ruth Jackson explains.

Ask the Council of Mortgage Lenders (CML) and it'll tell you that mortgages today are the most affordable relative to income they've ever been. A mere 10.6% of gross income was needed to cover average mortgage interest payments in November. Other than a brief low of 10.2% in mid-1996, that's the lowest number since the CML started recording data in 1974.

Capital Economics (CE) doesn't agree. It says mortgage affordability is "only in line with its long-run average and is no better than it was in 2004". The difference in opinion comes about because the CML only measures mortgage interest, whereas CE looks at mortgage interest and repayments. CE also measures mortgage payments as a share of national average disposable earnings, whereas the CML measures it against the average gross income of mortgage borrowers.

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Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.