Five year fixed rate mortgage now more popular
Over recent years fixed rate mortgages have been very popular amongst consumers who wanted to keep their mortgage repayments static for a period of time, with the deal enabling them to enjoy a specified period on a fixed rate on their borrowing, which means that their repayments will also be fixed for that period of time. Until recently most consumers have, however, opted for shorter term fixed rate deals of two or three years rather than committing to the longer term deals of five or ten years.
However, according to recent reports many consumers would not be happy to turn to the longer term fixed rate period of five years in light of the current volatile financial climate. A survey was recently carried out by Abbey, and of the one thousand mortgage holders that were polled around 30% said that if they had to remortgage now they would opt for a five year fix. Figures over the past few months have also reflected the rising demand for five year fixed rate mortgages, with figures rising from 7% in February to 12% in March, then to 24% in April, and finally to 30% in May.
A spokesperson for the Abbey said: “Opting for a longer term fix rate mortgage will provide mortgage borrowers with financial security in uncertain economic times. Whilst the May decision by the Bank of England was to maintain the base rate at five per cent, inflationary pressures mean that it is unlikely to fall again soon, and some commentators even think that inflation could lead to increasing mortgage rates.” He went on to state: “For borrowers who do want to fix for five years, there are some very competitive deals out there at the moment including Abbey’s 5.75 per cent product available up to 75 per cent loan to value.”
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- Base rate stays the same for June
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- Government rescue plan may take time to take effect
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