Interest rates affect mortgage choice
Oct 31, 2006
The number of borrowers taking out fixed rate mortgages has soared since the Bank of England raised interest rates in August, new figures show.
Figures from Mortgage Direct reveal a 20 per cent leap in the proportion of fixed rate mortgages - which have a fixed rate of interest rather than fluctuating with the Bank's base rate - taken out in the month following the rise.
A spokesman for Mortgage Direct said that consumers seemed to have a bleak outlook on the stability of the housing market and a larger percentage of homeowners were looking to secure a fixed rate mortgage for a longer period. However, a poll of mortgage intermediaries from specialist lender UCB Home Loans showed that the popularity of tracker mortgages, which follow the base rate, seemed undiminished, with 64 per cent reporting that they were at least as popular now as they were a year ago.
Around 76 per cent of intermediaries said that borrowers were choosing tracker mortgages as they did not expect interest rates to rise significantly in the next few years.
The best fixed rates we could find today were 4.64% from Britannia Building Society and 4.74% from the Yorkshire Building Society. An indication of the confidence in long term stability is given by the Woolwich who are prepared to offer a fixed rate deal of 4.98% until January 2017. (source moneyfacts.co.uk)
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