Fixed rate mortgages: Don't miss lowest rates in a decade warns A&L

08 May 2009 / by Rebecca Sargent
Homeowners should make the most of some of the lowest fixed rate mortgage deals in a decade, Alliance & Leicester has said.

According to the Santander owned mortgage lender, homeowners are risking missing the best fixed rate mortgage deals in ten years by delaying tying to a new deal.

Alliance & Leicester has found that more than 80 per cent of mortgage holders who are currently on a standard variable rate (SVR) have no intention of switching to a fixed rate deal any time soon, while 14 per cent intend to wait until interest rates rise.

Commenting, Nici Audhlam-Gardiner, director of Alliance & Leicester mortgages, said: "It is perhaps unsurprising that some homeowners currently on SVR deals are reluctant to commit to a new mortgage but past experience shows that fixed rates tend to increase in price before the base rate, in anticipation of the base rate increasing.

"Although SVR deals can be favourable for the short term, once interest rates start to rise they can become affordable very quickly. In comparison, as well as giving borrowers the security of low, regular monthly mortgage repayments, opting for a fixed rate deal will also protect homeowners from any future rate rises."

The new range of Alliance & Leicester mortgages includes a 2 year fix at 65 per cent LTV at 2.99 per cent, and a 75 per cent LTV 3 year fix with a rate of 3.94 per cent.

Ms Audhlam-Gardiner added: "Given the excellent rates on offer at the moment, it is concerning to see that a large proportion of borrowers are sticking on SVR or planning to wait until interest rates and house prices start to rise again before tying into a new deal.

"By the time interest rates rise again it will be too late and the best fixes will be gone," she warned.

"Historically we are looking at some of the lowest fixed rate deals in a decade and it is unlikely that they will fall any further so borrowers looking to remortgage or move home should act now."

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