Demand for capped mortgages increases due to the rising cost of SVRs.
As lenders standard variable rates have increased so has demand for capped mortgages. A capped mortgage is a product where rates cannot rise above an agreed level.
For example, home-owners on variable rate capped mortgages know that their rate will follow in line with their lender's standard variable rate. They know that their rate will rise and fall in line with any changes, however those on a cap deal are re-assured in the knowledge that there is a maximum level above which their rate cannot rise.
If your lender's SVR falls below the cap your rate falls in line but if it rises above the cap your rate will not increase.
Capped mortgages suit borrowers wanting to take advantage of the low BoE base rate while wanting some future security against a mortgage rate rise. Recently the number of capped mortgages available has increased with both First Direct and The Woolwich pushing their capped range.
Capped mortgages are generally set around half a per cent above average mortgage rates, which is a price that some mortgage holders consider well worth paying for financial security and peace of mind.
If you are looking for a capped mortgage or want more information on what products are available call Deal Direct for up to date, impartial advice and lenders latest rates.
