To those who are looking for the best mortgage rates in order to refinance their homes, or to get some added security over the next couple of years, the new 3.19% mortgage deal that is good for a five year fixed term may look very enticing. However, there is a great deal of significance behind this rate that is very telling.

This is because when a bank offers a great term that extends significantly into the future it reflects the lenders belief about how interest rates are going to behave in the future. Therefore, if Chelsea is secure enough to offer the low fixed mortgages then this should serve as a signal that they believe interest rates are not going to dramatically increase over the coming years, or at least for the next five years.

For borrowers, this is good news as lower interest rates are always desirable, but for those who are intent on saving some money, or making an investment, this may not be great news since it means that they are not going to see a large return over the next five years either. The first place that many people turn to for investment and savings options are banks or building societies.

A large safety deposit can offer income in the future if placed into a savings account, but it does not always offer capital along with it.  Investors like the idea of knowing they do have funds, but the amount can vary as a result of inflation.  For instance, if one puts down £10,000 with the rate of inflation and an increasing mortgage rate what they would end up paying is a bit under £7,000 which is of course much less.

This is why it is important that investors and savers understand the value of the stock market and equity income because equity in a home will not change as inflation continues to rise.  Therefore, investors often use equity to act as a hedge to prevent inflation from hitting their savings account.

Of course, there is always the risk that with the way house prices are falling and increasing in a steady sideways flow that you may not get back what you expect from your investment.  However, just like any stock market option, there is always a bit of risk involved in any potential yield.