New Year, new house; new mortgage or re-mortgage? With newspapers bombarding us with conflicting advice and views on mortgages, Strutt & Parker gives you its view on what it all means.

Michael Fiddes, Head of Agency at Strutt & Parker, comments that as the economy slowly heads out of recession, you may be facing a rather difficult choice with your mortgage. Should you take advantage of historically low interest rates to fix your mortgage for the long term or should you opt for a cheaper tracker rate linked to the Bank of England base rate (BBR)? With affordability now at its highest level since May 2004, mortgages are more affordable than they have been since the middle of 1996 and with competition in the mortgage market increasing, there are more options available for everyone (including first-time buyers).

Figures showed that movers in November needed an average of just 10.6% of their gross income to cover mortgage interest payments, down from 14.4% a year earlier. This is the result of falling interest rates and house price deflation. However, while affordability has increased, experts warn that strict lending criteria and big deposits are still an issue.

Q. Which type of mortgage rate should I choose?

A. Independent mortgage broker, Private Finance, believes that the Bank of England base rate is likely to rise over the next year or two but will stay low in historical terms. The fragility of the recovery is likely to deter the Bank of England from raising rates significantly between now and the end of 2011. The lack of available finance will constrain rate increases, even if we have a quarter or even six months’ strong growth.

It might make sense to choose a mortgage which tracks the BBR for the next year or two, based on the view that, as the BBR goes up, increasing competition in the mortgage market will mean that margins reduce – on tracker rates as well as fixed rates – so the pricing differential between variable and fixed mortgages should converge, although fixed rates might stay much the same.

Simon Checkley from Private Finance comments, "Of course, if you need the peace of mind of a long-term fixed rate, then you will be less concerned with the discount that tracker rates currently represent. Your circumstances will be the key to your decision so you may find it useful to talk through your dilemma with an independent, whole-of-market adviser."

Q. How many mortgage products are there?

A. Although still a small proportion of those available at the peak of the market in August 2007, the number of mortgage products has increased for the third month in a row, passing the 2,500 mark for the first time since May last year.

Competition is returning to the residential mortgage market, with a number of new fixed rate and tracker mortgages launched. Buy-to-let investors are also likely to be assisted in 2010 by an increase in buy-to-let lending as the year progresses, experts say.

Simon Checkley observes, "In the past two weeks we have seen an increase in competition in the buy-to-let sector, with banks either re-entering the market or offering attractive deals for the first time in a while. Lending criteria vary and maximum loan-to-value ratios are still limited, but lenders are offering free valuation and legal fees for re-mortgage business. And, of course, for larger investment properties many private banks will be prepared to lend to the right client. You just need to know where to look."

Strutt & Parker’s Fiddes adds, "We would advise anyone looking for a mortgage that there are options out there – you need to seek expert independent advice to ensure you can make the most of your money. Even if you require a high value loan and have difficulty with high street lenders, not just because of the size of the loan but also because you do not fit into the neat lending 'boxes' of high street banks and building societies, perhaps due to the complexity of your financial affairs, do not despair: we can put you in touch with brokers that can arrange bespoke mortgage solutions quickly and efficiently, leaving you free to get on with other things."