52% of Brits are on a fixed rate mortgage, despite falling interest rates

15 January 2009 / by Rebecca Sargent
More than half of Brits with a mortgage are missing out on any falls in base rate because they are on a fixed rate deal, new research from Fairinvestment.co.uk has revealed.

Following the latest interest rate cut from the Bank of England, mortgage lenders are finally reducing their tracker and standard variable mortgage rates, but new research from Fairinvestment.co.uk* has found that the majority of Brits will feel little or no benefit as 52 per cent are on a fixed rate mortgage.

However, of those questioned, 29 per cent are on a standard variable rate mortgage. It is the standard variable rate that most lenders have been cutting, so these customers look set to benefit from the latest cut which has brought the base rate to 1.5 per cent – the lowest level in 315 years.

A further 16 per cent of people questioned in the survey are on a tracker mortgage, most of which should benefit from the rate cuts, providing that their mortgage lender does not have a collar in place, which could prevent the rate from falling below a certain level.

Commenting, Fairinvestment.co.uk's chartered financial planner, Sharon Bratley, said: "For the 52 per cent of Brits on a fixed rate mortgage at the moment, the Bank of England's base rate cuts will not mean much. In fact they could even mean that these people suffer as a result of falling savings account rates. Although to be fair, those on a fixed rate deal are in the position of being able to budget as they have the certainty of a fixed monthly mortgage payment.

"However, for those on a tracker mortgage or standard variable mortgage, interest rates are beginning to fall. Just this week Abbey and HSBC launched new reduced tracker rate mortgage products on the back of this month's rate cut, and Lloyds TSB has said that its tracker mortgage could go to zero if the base rate does the same, which is great news for Brits on these type of mortgages, especially as finances are being stretched further and further."

Speaking of those on a fixed rate mortgage, Mrs Bratley added: "Having said that, lenders are also beginning to reduce the rates on new fixed rate mortgage rates, so for people who prefer the security attached to a fixed rate, it is certainly worth shopping around and comparing a number of deals when one deal comes to an end."

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*Research conducted for Fairinvestment.co.uk by OnePoll, with 2,000 respondents