Fixed v variable rates: Which deals are tempting borrowers?
Deciding whether to fix your mortgage rate or opt for variable product is a common conundrum faced by prospective borrowers.
However, new figures out today reveal the majority are choosing to fix their mortgage rate.
According to data from Experian, in May, 81% of mortgage shoppers were searching for fixed-rate mortgages, where the interest remains the same for the entire length of the deal.
It comes following a couple of months where the proportion of would-be borrowers looking for fixed deals had declined in favour of variable rate mortgages – also known as trackers – where the interest rate goes up and down according to external factors.
One of the main factors influencing variations is the Bank of England base rate, which was held once again at 0.75% yesterday.
While it has remained at 0.75% since August last year, there has been much speculation the level could be due to rise soon.
And Amir Goshtai, managing director of Experian Marketplace & Affinity, thinks this could be one of the reasons why consumers are increasingly searching for fixed-rate mortgages.
He said: “People want certainty when it comes to their finances, especially in times of such economic uncertainty. Rising popularity in fixed-term mortgages tell us borrowers are looking for low, fixed monthly payments to effectively manage their outgoings and keep control of their finances.
“Interest rates for mortgages and loans are relatively low so now is a good time for borrowers to shop around and seriously consider locking-in their monthly repayments.
Experian’s data emerged following analysis of its credit comparison service, which allows would-be borrowers to identify credit products they’re more likely to be approved for by checking their eligibility.
Article by Kate Saines for www.whatmortgage.co.uk