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Fixed rate mortgages fall in popularity

Fixed rate mortgages fall in popularity

Category: Mortgages

Updated: 20/01/2010
First Published: 20/01/2010

MONEYFACTS ARCHIVE
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Fixed rate mortgages accounted for fewer than one in five home loans arranged in December, new research has revealed.

It is the lowest proportion recorded since August 2008, and means a significant turnaround in sentiment has occurred since June last year, when more than four out of five borrowers had opted to fix their rates.

With the initial rate on the best tracker mortgage product enjoying a 1.5% margin over the best fixed rate deal, Ray Boulger, spokesperson at John Charcol, said it would take a substantial rise in bank rate to see a borrower taking a tracker become worse off than one who chose a fixed rate.

"Of course, some people always prefer the security and comfort that a fixed rate naturally brings, but in the current market you really do need to question whether you are paying over the odds for that security," he added.

"When the appropriate time to fix will be is the million dollar question, but with bank rate likely to stay very low, say not above 2.5%, for quite some time, and the cost of fixed rate mortgages still falling, it is not yet."

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