by Mark Johnston
With some extreme reports of interest rates going up to 8% by the end of 2012, borrowers are asking themselves whether now is the time to switch to a fixed rate deal.Ray Boulger of John Charcoal, an award winning independent mortgage advice firm has suggested that interest rates will rise to almost 8% over the next few years. Fixing mortgages now may protect borrowers from high repayment fees.
Research by Fair Investment Company suggested that 70% of people polled believed that the Bank of England base rate would rise by mid year 2011. This may well be alarmist reporting as its safe to say that the record low base rate of 0.5% wont last forever. The question on everyone’s lips is to what extend will interest rates rise and when?
This uncertainly is creating unrest with home owners as new reports come out each day suggesting that rates will remain static whilst other predict sky high increases. This concern is being echoed throughout the market whether its first time buyers or established homeowners.
These borrowers are starting to look towards fixed rate products to protect themselves from any base rate changes. The surge in interest in these products have meant lenders are responding with increasingly competitive deals.
The Council of Mortgage Lenders (CML) latest figures show that fixed rate mortgage applications are on the increase. This shuns the recent trend of borrowers staying on variable rates once their existing mortgage deal expires. Fixed rate mortgages accounted for 48% of new loans during June this year which is an increase of over 40% when compared to the first half of this year.
Mortgagerates.org.uk have searched the market for the best fixed rate deals on offer at the moment. Although these offers may well top many best buy tables, its always wise to search for alternative offers are lenders launch new deals on a daily basis.
Yorkshire building Society is offering its lowest ever 5 year fixed rate deal at 3.99%. The mortgage has a loan to value (LTV) of 75% so borrowers need a 25% deposit.
Tom Girling, mortgage product manager at Yorkshire Building Society, said the mortgage offers “great value and peace of mind over the medium and longer-term.” Mortgagerates.org.uk has to agree.
The banking giant HSBC is also offering their lowest ever 5 year fixed special fixed rate mortgage. The Bank slightly undercuts Yorkshire Building Society on the rate at 3.95% but only offers the mortgage on a 60% loan to value (LTV) basis so a larger deposit is required. The deal requires a £595 book fee for successful applicants
Norwich and Peterborough Building Society are offering a 5 year fixed rate mortgage and although its more than some of its competitors its offering the loan on a 80% loan to value (LTV) which according to Ewan Edwards, their head of marketing is “one of the lowest longer-term fixed rates available in the mortgage market overall.” When taking the amount of deposit thats required into account.
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