The UK's independent property help portal
27 March 2008

Financial turmoil means homeowners finding security in fixed-rate mortgages

Permalink: Financial turmoil means homeowners finding security in fixed-rate mortgages
by Kay Mitchell

Financial turmoil means homeowners finding security in fixed-rate mortgages

According to moneyfacts.co.uk, nervous homeowners are finding security in ten-year fixed-rate mortgages.

The current financial turmoil means homeowners are worried about the ongoing effects of the credit crunch so a growing amount of people are seeking these types of mortgages.

However, in spite of an increase in demand for these types of mortgages, competitive deals are becoming hard to find as lenders run out of crash due to the fallout from the credit crisis.

Consequently, lenders have been withdrawing their fixed-rate deals over recent weeks, pulling all of their home loan range, ceasing to provide loans to sub prime borrowers, and increasing their rates.

Julia Harris of moneyfacts.co.uk said as well as increasing rates and withdrawing some of the their deals, lenders are implementing new rules, such as only accepting professionals, or requiring the borrower’s parents to act as guarantors.

Experts at Thisismoney say homeowners would benefit from taking a five-year fixed-rate deal. In the past, two-year fixed rate deals have been extremely popular but these come with high arrangement fees.

The best two-year rates today have fees of around £1,500, while those for longer term deals generally stop at £1,000.

Even though the cheapest two-year rates are lower than five-year deals, once you have calculated the total cost of re-mortgaging, opting for the longer term works out better.

Over a ten-year period, re-mortgaging fees on the five-year deals would add up to £2,000, but on the two-year deals they would add up to £7,500.

However, Thisismoney say five-year fixed-rate deals remain relatively unpopular because many borrowers fear that they will miss out if interest rates suddenly fall.


Click here to discuss this: Home Move property forums



Related stories to: Financial turmoil means homeowners finding security in fixed-rate mortgages



Previous: «
Next: »

Visited 1248 times, 1 so far today