Fools Go For Fixed-Rate Mortgages
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