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Product category: Banking / credit / debt
News Release from: Motley Fool | Subject: Banking
Edited by the Insidemoneytalk Editorial Team on 25 April 2007

Fool.co.uk responds to Prof. Tim
Congdon's warning on inflation risk

David Kuo, Head of Personal Finance at Fool.co.uk, says:

"Prof" "Tim Congdon's comments are a timely reminder to homeowners with mortgages that we cannot afford to rely on low interest rates and benign inflation"

""Inflation remains a risk, but whether the Bank of England will need to hike interest rates to 7.5% as suggested by Prof.

Congdon is debatable.

However, we should not try to second-guess what the economy will do if economists can't agree".

""Despite scare stories about the withdrawal of fixed-rate mortgages, it is still not too late to apply for one".

"The Fool.co.uk mortgage service shows that over 200 fixed-rate mortgages are still available".

"For instance, Abbey and Britannia are still offering two-year and five-year fixed-rate deals respectively".

""Apart from fixed-rate deals, homeowners may want to consider another simple option, namely overpaying their mortgage.

Overpaying a 25-year, £100,000 mortgage, fixed at 5.75%, by as little as £60 a month will cut the term of the loan by over four years.

It will also result in total savings of £17,390".

""The Bank of England, like the proverbial one-club golfer, has to play the best shot it can with the only club in its bag, namely interest rates".

"But consumers have a number of clubs at their disposal".

"Consequently, we should use what we can to avoid paying more than we need to".

"In some cases you can achieve a hole-in-one for as little as £2 a day!".

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