Recessionary fears push consumers to long-term mortgage deals
Published: 8 July 2008
By MoneyhighStreet Staff Leave a Comment
Updated: 30 November -0001
As fears mount about the possibility of the UK economy entering a period of true recession in the near future, consumers are increasingly looking to fixed their mortgage rates for as long as possible.
Figures from the Fair Investment Company showed that a third of consumers would pick a fixed rate mortgage that lasts between five and ten years, despite the fact rates on these deals continue to rise.
What''s more, 25 per cent of people said that they would consider two to five-year deals, even though reports last month showed the average rates on these mortgages are now above seven per cent.
"Our research was surprising considering how high mortgage rates are in the current market," James Caldwell, director of the Fairinvestment.co.uk website, said.
"For 25 per cent of our respondents to say they would choose a short term year fixed-rate, despite the fact they are unlikely to find a rate under seven per cent, suggests that people do not have much confidence in the chances of the mortgage market recovering within the next five years."
Interestingly, 15 per cent of people said they would even consider a mortgage deal that lasted up to 25 years.
"The fact that people would still consider fixing at high rates for more than ten years suggests that consumer confidence is low and borrowers are after long term security during unstable times," Mr Caldwell concluded.