Interest Rates

A big benefit if interest rates fall.

The other big selling point of a capped mortgage is that if interest rates fall during the term then so too should your payments. This is what sets the deals apart from fixed rate mortgages. And in some cases history shows that caps can do their customers proud. Borrowers who took out capped rates rather than fixes back in early 2001 made particularly good choices. Borrowers on the fixes were marooned with loans set well above 7.5 per cent. Borrowers with capped deals saw their payments fall around half a dozen times over the next two years. But all along they knew that if an economic crisis had sent rates back up to the high levels of the previous decade then their payments would never have risen above their pre-set caps. Fans of capped rates say this proves you get flexibility and security in the same simple product.