Speaking on BBC Radio 5 Live with Adrian Chiles, Martin answered a question from a caller on the best mortgage to get.
David asked: “I bought a house worth £140,000, and put £20,000 down. We are now coming up to our mortgage renewal, but should I get a fixed rate or tracker?”
Martin responded: “I understand why you are questioning it, as the worry is if you go for a fixed it could end up it could have been cheaper if you had gone for a tracker.
“One of the things we need to understand in finance is separating a bad outcome and a bad decision.
“If you are saying to me ‘I’m thinking about fixing, and what is important to me is the security of knowing what I will pay so that I know I can afford it’, that is a good decision, even if with hindsight, in the end it would have been cheaper to go for a variable rate.
“That is an issue of outcome, and without a crystal ball we can’t do that.
“Now of course we can be a bit sensible and say interest rates are at 0.25 per cent, the Bank of England has signalled they are likely to start going up, there isn’t that much room for them to drop unless they went negative, mortgage rates are just a little bit ahead, even fixed rates are a tiny bit ahead of all time 200 year historic lows, they are very cheap right now, the liklihood of them going up is a real potential issue.
“But this still all guess work – so what you really have to focus on is how much more I’m likely to pay, and how much more important is security for me?
“Fix for security, and fix longer, say five years. Where we are now with Brexit coming up, which leads to uncertainty, and the BofE signalling rates going up, if you want security look at a five year fix if you can get one.
“Go and talk to a good independent mortgage broker and see what they can do for you, and look on comparison sites which have direct deals mortgage brokers don’t have.
“Do this three to six months before you need to switch. It is also worth going to your current provider as if they give you a good deal this could be a way to avoid fees too.”
Whilst discussing mortgages on the show, Martin also gave his opinions on the housing market – something he has spoken out about before.
Appearing on the BBC Daily Politics Show, Martin was asked by host Jo Coburn whether the extra £10billion the government have promised to help first time buyers onto the property ladder was taxpayers money well spent.
He responded: “I always worry about this one, first of all, I have concerns with encouraging people who can only raise a five per cent deposit to buy a house.
“Yes the scheme itself is quite good, you have to use it on a new build property remember, not on any property out there, but I’ve always worried about the government pushing people who’ve only been able to save a limited deposit to effectively stretch their finances to buy a property.
“And of course the more money we push into the housing market at this level, the more we start to see inflation of house prices, so whether it’s somewhat self-defeating is an interesting one.”
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