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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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 Posted: Mon Mar 26, 2007 3:30 am Post subject: Homeowners shaken by interest rate rises, says Fool.co.uk |
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Nine out of 10 first-time buyers opt for fixed-rate mortgages.
· Eight out of 10 people who remortgage shun variable rates.
· Tracker mortgages losing their appeal.
Three interest-rate hikes within the space of six months have unsettled Britain's homeowners. A study into mortgage products taken out through Fool.co.uk's Mortgage Service (1) at www.fool.co.uk/mortgages, shows that homeowners believe more interest-rate rises are on the horizon.
A rate rise in August 2006 saw four out of 10 homeowners opt for fixed-rate mortgages. Another increase in the cost of borrowing in November saw seven out of 10 homeowners opt to fix their mortgage rates. This jumped to almost eight out of 10 borrowers after a third increase in January this year.
First-time buyers have traditionally been more cautious over interest rates than people looking to remortgage. However, homeowners who remortgage are now showing signs of increased caution too. In August 2006, eight out of 10 first-time buyers took out fixed-rate mortgages. This rose to nine out of 10 in January 2007. Over the same period, fixed-rate products taken out by people remortgaging has jumped from 40% to 80%.
David Kuo, Head of Personal Finance at Fool.co.uk, says: “Fixed-rate mortgages are the best way for homeowners to insulate themselves from rate rises. It's ideal for people who need to know where they stand financially from pay packet to pay packet.
“Currently, interest rates are expected to rise 0.25% within the next two months and a further 0.25% six months after that. This means homeowners may need to find an extra £83 a month or £996 a year in higher interest payments on a £200,000 loan.
“There is, of course, no guarantee that base rates will rise to 5.75% before the end of 2007. However, borrowers should resist the temptation of second-guessing the direction of interest rates when their homes are at stake.”
By Sonia Rehill
soniar@fool.co.uk
http://www.fool.co.uk
About The Motley Fool–Launched in 1997, The Motley Fool is an independent, award winning personal finance website at www.fool.co.uk - It is one of the UK's most popular financial websites dedicated to providing expert financial advice, community-generated guidance and independent financial comparison, with 2.5 million members and over 500,000 site visitors a month. |
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