If forced to remortgage at the present time in the current unstable market, most homeowners would opt for the certainty of a fixed rate deal, research from Abbey has found.
According to the study, 79 per cent (almost four out of five) of homeowners would choose a fixed rate deal over other options, such as a tracker mortgage. Only 18 per cent would opt for a tracker or variable rate mortgage, and of those that would go for a fixed deal, 40 per cent would choose a short term two year fixed rate.
Thirteen per cent said they would get a five year fixed term, and seven per cent would go for a flexible tracker.
These findings come in the wake of several events that have shook the public’s confidence in the interest rates available and the Bank of England’s base rate; namely, the sub-prime mortgage crisis in the US which has had a negative knock-on effect in the UK and culminated in the downfall of Northern Rock several weeks ago.
Sue Hayes, Director of Mortgages at Abbey, said: “Fixed rates have always been popular in times of uncertainty when people look to gather as much security as they can from their mortgage.”
This trend will only be encouraged by recent findings from John Charcol which indicate that a new two-year view of the bank rate has brought with it the first low fixes of the season.
Katie Tucker of John Charcol comments, “Three month LIBOR is falling and now stands at 6.34%, compared to the 6.9% that it reached last week, following the £10 billion pumped into the wholesale money markets by Bank of England.
“The silver lining for mortgage borrowers in this clouded sky that is the credit crisis will be the minimal chance of the base rate rising to 6%; it is now more a matter of when the Bank Base rate will start to fall. This has caused the swap rates that govern the prices of fixed rates to reduce nearly half a percent over the last month.”
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