Those with fixed rate mortgage may be losing out
A recent report has highlighted how many British homeowners that have fixed rate mortgage deals in place may be missing out financially because of the cut in interest rates over recent months. Since October the base interest rate has been slashed from 5 percent to just 1.5 percent, and many think that it will continue to fall and could even hit zero at some point this year. However, officials have said that the most recent rate cuts will not benefit many homeowners who switched to fixed rate deals when interest rates were on their way up.
One industry groups claims that over 50 percent of homeowners are set in their ways with a fixed rate mortgage deal. The group is now advising those on fixed rate mortgage to start shopping around for the best mortgage deal ready for when the fixed rate mortgage comes to an end. The most likely people to benefit from the most recent rate cuts are the 29 percent of homeowners that have a standard variable rate mortgage with their lender.
One industry official said that those stuck on fixed rates could be losing out given the fact that the base rate was now at its lowest in the history of the Bank of England, at 1.5 percent. However, she added: “Although to be fair, those on a fixed-rate deal are in the position of being able to budget as they have the certainty of a fixed monthly mortgage payment.”
In the meantime the Royal Institute of Chartered Surveyors has stated that many first time buyers are still struggling to get onto the property ladder, and this stems from a lack of mortgage lending from lenders, who are still reeling from the effects of the credit crunch, as well as the fact that many lenders are demanding far higher deposits than most first time buyers can cope with.
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