Fixed-rate mortgages are, as the name suggests, deals in which the interest rate remains the same for the term of the deal. Borrowers can choose deals in which they fix their rate for two, five-years or even 10 years.

According to analysis by Moneyfacts.co.uk, while 80.1% were searching for the availability of fixed-rate deals, just under 20% were looking for variable rates – which offer interest rates based on external factors, such as the Bank of England base rate.

Currently the Bank of England has set rates at a low of 0.1% but there are some fears this could be increased, particularly as inflation is currently high.

Moneyfacts said in these times of economic uncertainty, it would seem the majority of borrowers had decided it would be easier to budget by protecting themselves from future interest rate volatility in the shelter of a fixed deal.

Indeed, Darren Cook, head of analyser products at Moneyfacts, said said its data demonstrated a vast majority of potential new mortgage holders may be more risk-averse in the current economic climate.

He explained as many as 87% of the deals in the ‘fixed rate’ mortgage market were two or five-year products. Meanwhile, a third of borrowers were looking for a two-year deal whilst just over a quarter were searching for a five-year deal.

Cook added: “Longer term financial stability may also be in the forefront of consumers’ minds as the economy moves forwards, with 8.93% of demand taken up by those looking for a 10-year fixed rate mortgage.”

 

Article sourced from What Mortgage on 22^nd September 2021. Original full article can be viewed by clicking link below

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