Fixed-rate mortgages favoured to avoid sharp interest rate rise

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Fixed-rate mortgages favoured to avoid sharp interest rate rise

Fri 17th Dec 2010

People could opt for taking out fixed-rate mortgages after it was suggested that a rise in interest rates could put many homeowners under pressure.

Chris Jenkins, creative director at Dallas Matthews, voiced his concern over tracker mortgages, suggesting that a sharp increase in the Bank of England's base rate could mean many people will be left unable to pay their bills.

He said this, combined with an increase in gas and electricity prices, could mean that homeowners fail to meet loan repayments and the number of repossessions may therefore rise.

His comments were compounded by a report from the Council of Mortgage Lenders, released earlier this week, which predicted that the number of repossessions is expected to increase by 6,000 to 40,000 over the next year.

To prevent this happening, Mr Jenkins advised to make financial preparations.

Alternatively, proprietors could take out fixed-rate mortgages, which stay at a constant repayment price, regardless of interest rate changes.

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