Being able to predict a change in base rate can be really useful when deciding what type of mortgage to take out. It would be fantastic, for example, if we knew that rates were going to fall and so took out a cheap tracker or that we knew they would be rising and so we would take out a low fixed rate mortgage. However, people do not take out the best possible mortgage because they are not able to predict the future that accurately.

Making this sort of prediction is not that easy. The Bank of England sets the base rate depending on the economy is doing. In this present time, it is probably possible to predict what they might decide about the base rate next month and maybe even in a few months time. However, the term of a mortgage is usually for at least twenty years and so you would need to be very clever to be able to predict what it will do in that sort of time period.

However, it is important to remember that you do not have to stick with that same mortgage for the whole period of time. It is possible to switch mortgages, although some companies will tie you in for certain time periods. It is unlikely that they will tie you in for the whole term and you may even be able to get out of a contract with them, but it will cost you money.

Therefore, you will have to trust your instincts when choosing your mortgage rather than trying to predict future interest rates beyond the short term. You could listen to economists and give past trends some thought, but you could be better off using your time to make sure that you find the cheapest mortgage, the one with the lowest interest rates, lowest costs and most flexible terms. Economists have been wrong and no one predicted this period of recession that we are in at the moment would be so bad as it is. Therefore, it is better to not try to predict very far in to the future.

By Jasmina