Ray Boulger, senior technical manager at Charcol, said: "Some borrowers will prefer the easier budgeting provided by a fixed rate but those prepared to take a view on interest rates can expect to save even more money over the next two years with a good discount mortgage, despite the fact that the Bank Base Rate is likely to stat rising later this year. The current margin between fixes and discounts is such that the Base Rate would have to increase significantly, probably by around 2 per cent, depending on the timing of the increases, for deals such as this to end up costing more than a fixed rate over the two years.
"It is worth noting that a 6 per cent bank Base Rate was the peak of the last interest rate cycle, despite the average City view being that it would peak at around 6.75 per cent."
