Huge rise in number of cheap five-year fixed-rate mortgages
Interest rates remain at the 4.5 per cent level, but a rate rise of up to a quarter point by the end of the year is imminent. Rates have been stable for some time, but rising swap rates indicate that change is afoot. The financial forecast is having a major impact on the mortgage market; with lenders reshuffling their ranges of mortgage loans in order to meet the change head on.
Usually when interest rates look like increasing financial advice dictates that first time buyers and remortgage customers opt for fixed rate payments . That way, the monthly repayments are set and there is no likelihood of changes. However, experts in the mortgage market are instead urging borrowers to play the long game, and opt for tracker mortgages .
Fixed rate mortgages have increased in price, due to long-term market uncertainty. Currently, better value for money can be found in the tracker mortgage market. The choice really depends on the affordability of the loan deal for the individual consumer� and in some instances a fixed-rate mortgage can be safer.
One expert was reported as saying: It�s not always as clear cut as fix or tracker. What people should be asking themselves is whether they are already at the top level of affordability when it comes to their monthly outgoings. If so, and if even a small rise is base rates would stretch this, then they would be wise to opt for a fixed rate. If they have some leeway available then they would be better off with a tracker because, ultimately, all the pointers indicate that rates are unlikely to rise significantly in the next two years.
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