Abbey has launched a 10 year fixed rate mortgage to reflect the fact that more people are opting for longer term fixes in order to gain some certainty in the current economic climate.
Research has found that one in 10 mortgagers or remortgagers would now choose to fix their mortgage
rate for 10 years or longer, so on Friday Abbey will launch a 10 year fixed deal which offers a rate of 6.24 per cent and requires a £999 fee.
Longer term fixed rate mortgage
deals are becoming increasingly popular as the demand for the previous favourite – two year fixed rate mortgages
– is at its lowest level since March.
The number of people that would choose to fix their mortgage rate for five years remains the most popular choice at 27 per cent of the market, which makes it twice as popular as the second favourite, the three year fixed rate deal.
"People's horizons are getting even longer" Abbey
said, with the popularity of a five year fixed rate growing rapidly. The three year fix is also catching it up, with 11 per cent of people looking to remortgage choosing to fix for three years compared to just three per cent doing so in February.
"The Abbey Remo Index gives a really interesting insight into the minds of homeowners at the moment, said Phil Cliff, director of Abbey Mortgages."The credit crunch seems to have instilled a longer-term vision among homeowners who want to make sure they are well and truly out of the 'crunch' period when they remortgage again."
Analysts are offering varying opinions as to whether interest rates will go up or down in the coming months, as inflation threatens to hit the four per cent mark, but this hasn't stopped a hopeful 10 per cent from opting for flexible or tracker mortgage deals. The number of people taking out two year tracker home loans has doubled in the last two months.
However, this group of brave homeowners is far outweighed by the hoards of people who are seeking the security of knowing how much their mortgage payments will be each month and opting for a fixed rate accordingly. Fixed rate mortgages have drastically grown in popularity since the credit crisis struck last summer; in March they were the choice of 35 per cent of people, compared to 60 per cent in June.
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