More people 'opt for fixed-rate mortgages'
Published On 26 March 2007
Recent interest rate increases, coupled with the expectation that there are more to come, have changed the way people approach mortgages and remortgages, new research suggests.
Data gathered by consumer website fool.co.uk indicates that, since interest rates were first increased in August last year, the numbers of people considering fixed-rate mortgages has increased from around 40 per cent to approximately 80 per cent.
First-time buyers are particularly likely to opt for a fixed-rate mortgage, with nine out of ten of first-time buyers choosing this sort of deal.
"Fixed-rate mortgages are the best way for homeowners to insulate themselves from rate rises," explained David Kuo, the head of personal finance at Fool.co.uk.
"It's ideal for people who need to know where they stand financially from pay packet to pay packet."
Mr Kuo added that there is "no guarantee that base rates will rise to 5.75 per cent before the end of 2007", but warned: "Borrowers should resist the temptation of second-guessing the direction of interest rates when their homes are at stake."
Recently, Nationwide revealed that it would offer first-time buyers a fixed-rate 25-year mortgage.
Stuart Bernau, the lender's executive director, said that the new deal "not only offers long-term good value to borrowers looking for the security of fixed payments but also the flexibility of a 10 year deal".
