Borrowers shun fixed rates
The move away from fixed rates in the last six months can be seen in Mortgageforce’s figures for borrowers opting for them.
Jun 75% * Jul 63% * Aug 59% * Sep 46% * Oct 34% * Nov 29%
Katie Tucker, Technical Manager for Mortgageforce said: “The choice between a fixed rate and a variable rate is more personal now than ever; the advantage in the price difference is cancelled out by the likelihood of the Bank rate being increased in the next two years.
“This means borrowers should firstly take whole of market advice to ensure the best selection is available to them, and secondly, choose their rate based on their own personal ability to afford potential increases in the rate in the next few years.
“A tracker is not for you if you suspect you’re not disciplined enough to overpay in the short term while your contracted payments are low, or if you would struggle if your monthly payment increased by about another quarter in a year’s time.” (assuming a 1% increase on a current 4% rate on an interest-only mortgage).