A dilemma facing today’s UK homeowner is whether or not to take the gamble and switch to a fixed rate mortgage product. Figures suggest the Bank of England would need to push interest rates to almost 3% before it would pay off for those seeking a new loan product to obtain a fixed type.

The Bank of England will be making the decision to increase the rate more than likely within the next three months, according to most speculations. Increasing inflation numbers is putting constant pressure on the bank to reign in the economy before pricing gets out of control. One way to do that is make money more expensive to obtain.

For those seeking a new loan product, timing of the decision to change is the key factor to success or failure of a new mortgage. Several economists have issued a word of warning to those anxious to change. A possible sharp increase in rates is coming soon.

An economist with Capital Economics, Paul Diggle, commented on obtaining either a fixed rate or variable rate loan and future payments, saying: "We continue to think that the case for an immediate rate rise is weak. And even if Bank Rate were raised within the next few months, the chances of this signaling the start of a sustained round of tightening are slim. If we are right, then a borrower taking a fixed-rate now will find themselves paying considerably more over two years than those on variable-rate deals."

Melanie Bien, with Private Finance, discussed fixed mortgage loan products compared with variable products, saying: "With a significant gap between the pricing of variable and fixed rates, there has been much analysis as to how much interest rates need to rise to make a fix worth your while. But while predictions and forecasts are all well and good, the truth is nobody knows when interest rates are going to rise and by how much."