Survey reveals Britons want fixed-rate mortgages

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by Kay Murchie

According to a survey from Fairinvestment.co.uk, over half of Britons would prefer a fixed-rate mortgage.

The survey established that 57% of those considering a mortgage would choose a fixed rate over any other type of mortgage product.

The results consisted of 30% of the total respondents reporting that they would prefer a short-term fixed rate mortgage while 27% would opt for a long-term fixed interest rate.

James Caldwell of Fairinvestment.co.uk said a fixed rate deal allows homeowners the security of knowing what their monthly repayments will be and therefore to budget accordingly, and are safeguarded from any increases in interest rates.

The survey also established that 23% of homeowners would favour tracker mortgages, 9% would chose a discounted mortgage, 8% would chose a variable rate mortgage and 3% would go for a stepped deal.

It is believed that Britons would prefer this method as the current economic outlook is uncertain and earlier this month, the Council of Mortgage Lenders said 27,000 homes were repossessed last year.

Mr Caldwell added in spite of 2 cuts in interest rates in as many months, people are looking for certainty in their personal finances. With a large proportion of people coming out of existing fixed rate arrangements back onto lender variable rates, many people are keen to re-fix their mortgages.

However, Mr Caldwell concluded by saying, while it is understandable that homeowners want to safeguard themselves from economic uncertainty, choosing a fixed-rate mortgage means that they do not benefit from any further cuts in interest rates.

Earlier this month, Chancellor Alistair Darling unveiled plans to revive the ailing home loan market after concerns that UK is heading for a housing slump.

The Chancellor said that fixed mortgages for 25 years will become the norm. He said fixed-rate mortgages are popular, however, the majority of them only run for about 5 years.

Mr Darling plans to encourage the launch of mortgages fixed for up to 25 years, providing more security for struggling homebuyers and added he wanted to see ‘greater availability of affordable long-term fixed-rate mortgages’.

In his first budget next month, he will encourage lenders to offer fixed-rate mortgages lasting up to 25 years at reasonable rates.