Why should borrowers opt for the best rate fixed mortgage deal now?
Many more borrowers are opting for the best rate fixed mortgage deal they can find right now in spite of experts predicting a further year will pass before any likely BOE base rate increase.
Council of Mortgage Lenders data shows 65 per cent of borrowers, who took out a home-loan last November, locked themselves into a fixed rate mortgage deal. A surprising figure when considering variable rate mortgages, including trackers and discounted deals remain significantly cheaper.
With interest rates expected to remain low for the foreseeable future, borrowers could be expected to hold out for the cheapest mortgage rates, however data shows that this is not the case. British borrowers tend to be more risk averse and prefer having a safety net offering security and protection against an interest rate rise. Council of Mortgage Lenders data shows borrowers are happy to pay a premium for this protection.
While a premium will be charged for a fixed rate, borrowers appear to be very happy to pay because the current best rate fixed mortgage deals are now at historically low levels and offer good value. Most borrowers understand that the BOE base rate is expected to remain low for sometime to come but they do not want to take a risk. Home-owners generally take out the maximum mortgage they can afford, few have a buffer in their budget and so cannot afford to get it wrong making a fixed deal a safe and attractive option.
