Fools Go For Fixed-Rate Mortgages

Mortgages and Home

26 March 2007 | 0 Comments

Recent interest rate rises have sparked a big increase in demand for fixed-rate mortgages.

Three interest-rate hikes within the space of six months appear to have unsettled Foolish homeowners. We've studied all the mortgages taken out through The Motley Fool Mortgage Service since last summer, and we've found that demand for fixed-rate mortgages has shot up.Following last August's base rate rise from 4.5 to 4.75%, 40% of borrowers opted for fixed-rate mortgages. Another rise in November really made an impact and 70% of borrowers went for a fixed rate. That number then rose to close to 80% of borrowers after a third rate rise in January this year.First-time buyers have been even more cautious; 90% of this category went for fixed-rate mortgages in January.The move to fixed-rate deals isn't that surprising. Many pundits are predicting further interest rate rises this year, perhaps to 5.75%, and if you're borrowing close to your financial limit, the security of knowing what your monthly payment will be each month is attractive.On the other hand, no pundit can ever be certain about what will happen, and that uncertainty increases over longer periods. You might sign up for Britannia Building Society's 5 year fixed-rate mortgage today where the rate is 5.24%, only to find that the base rate has dropped back to 3% by 2011. Who knows?However, I am certain about one thing. You should always sign up for some sort of "deal" with your mortgage. One of the biggest mistakes of my financial life was to tootle along with a standard variable rate mortgage for more than a year out of pure laziness. (This happened before I joined The Fool!) Standard variable rate mortgages are nearly always very expensive (typically a whopping 7.25%APR at the moment). If you don't fancy a fixed-rate deal, look at a range of discount and tracker mortgages at our mortgage centre. There should be something there that suits your needs.>Compare mortgages at The Fool.>Nineteen Years Of Rising Mortgages>Ways To Pay Off That Mortgage Earlier

Comments

Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © lovemoney.com All rights reserved.

 

loveMONEY.com Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FCA) with Firm Reference Number (FRN): 479153.

loveMONEY.com is a company registered in England & Wales (Company Number: 7406028) with its registered address at First Floor Ridgeland House, 15 Carfax, Horsham, West Sussex, RH12 1DY, United Kingdom. loveMONEY.com Limited operates under the trading name of loveMONEY.com Financial Services Limited. We operate as a credit broker for consumer credit and do not lend directly. Our company maintains relationships with various affiliates and lenders, which we may promote within our editorial content in emails and on featured partner pages through affiliate links. Please note, that we may receive commission payments from some of the product and service providers featured on our website. In line with Consumer Duty regulations, we assess our partners to ensure they offer fair value, are transparent, and cater to the needs of all customers, including vulnerable groups. We continuously review our practices to ensure compliance with these standards. While we make every effort to ensure the accuracy and currency of our editorial content, users should independently verify information with their chosen product or service provider. This can be done by reviewing the product landing page information and the terms and conditions associated with the product. If you are uncertain whether a product is suitable, we strongly recommend seeking advice from a regulated independent financial advisor before applying for the products.