Interest rate rises causing fixed-rate mortgage 'popularity'

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Interest rate rises causing fixed-rate mortgage 'popularity'

Tue 13th Mar 2007

Increasing numbers of first-time buyers are taking out fixed-rate mortgages in order to counteract the threat of interest rate rises.

Research carried out by the Council of Mortgage Lenders (CML) in January shows that 85 per cent of people investing in bricks and mortar for the first time in January chose a fixed-rate product – the highest figure ever recorded.

Among all homebuyers, fixed-rate mortgage take-up accounted for almost three quarters of all new loans in January, the highest proportion in 12 months.

With the prospect of an interest rate rise "balanced on a knife edge", director general of the CML, Michael Coogan, described how increasing numbers of borrowers were choosing to opt for the security of a fixed rate.

"More and more borrowers are protecting themselves against this risk and choosing the certainty of fixing their monthly mortgage payments, which allows them to plan ahead with confidence," he added.

The CML also found that the average fixed-rate mortgage possessed an interest rate of 5.27 per cent in January, compared to an average rate of 5.54 per cent for a variable rate package.

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