Fixed rates proving a hit with first time property purchasers
The recent three interest rate rises that have been enforced in the UK by the Bank of England do not seem to have had an adverse effect on the mortgage and housing industry. However, what has resulted from these interest rate rises is an increasing level of interest in fixed rate mortgages from first time buyers that want to enjoy more stability when just starting out with their mortgage. With the threat of further interest rate rises hanging over their heads, many first time buyers have opted to take out a fixed rate loan to buy their property in order to benefit from fixed monthly repayments for the specified term.
A couple of months ago a number of banks reported that the soaring popularity with fixed rate mortgages had resulted in them having to take some of these fixed rate products off the market as a result of funding being used up. However, more recently, with some experts now predicting that interest rates could stabilize once they hit five and a half percent, a number of lenders have announced that they are now able to offer fixed rate mortgages that are set at five percent or under, which could mean great value borrowing for first time buyers that want to enjoy greater affordability.
One official from the Royal Institute of Chartered Surveyors said: "The interest rate rises have started to worry would-be buyers with many concerned that they will be unable to meet mortgage repayments. Affordability for many will continue to decrease in the coming months as the January rise, and further rises take effect." The director of the Council of Mortgage Lenders, Michael Coogan, added: "Each month it seems that the prospect of another interest rate rise is balanced on a knife edge. More and more borrowers are protecting themselves against this risk and choosing the certainty of fixing their monthly mortgage payments."
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