Fixed rate mortgages are the mortgage type of choice for homeowners and first time buyers. Hardly surprising with the Bank of England dropping interest rates to 0.5 per cent and holding the rate in April.
Many consumers are realising if they go for a fixed rate mortgage now it will secure them a low rate for several years as interest rates will more than likely start to increase significantly by the end of the year. Also the fact that it is widely reported that reducing the base rate any further will have no further benefit to helping the economy and other measures have been taken by the government to attempt to tackle the problem.
Many brokers have reported huge rises in the number of applications for fixed rate mortgages. As the base rate was 2.5 per cent in December it has dropped significantly in the last five months. However there maybe other factors that can explain the huge increase in those applying for fixed rate mortgages.
Tracker mortgages are becoming less appealing as consumers are concerned the base rate at some point soon will start to climb again meaning month on month consumers mortgage payments will increase, obviously not the best option and not nice to see the bank sending you multiple letters informing you they will be taking a little bit more next month.
Although
fixed rate mortgages are initially a little more expensive as interest rates rise again they will offer savings in the long run compared to tracker mortgages. Even tracker mortgage rates at the moment are pretty poor as lenders are still being cautious, offering not very competitive mortgages. Rates are significantly higher than the base rate and a lot more than you would find a few years ago.
The loan to value (LTV) available on tracker mortgages is another reason for lack of interest in them. Only recently have you been able to find one of these mortgages above 75 per cent LTV. Deposits are a big issue for consumers a 25 per cent deposit puts these mortgages out of reach for most people. Join the rest of consumers, shop around and find the best fixed rate deal for you and lock in now.
