Interest in fixed rates continues to rise

With another interest rate rise looming on the horizon in the very near future, many lenders have reported continued growth and interest in fixed rate mortgages amongst homeowners looking to stabilize their financial outgoings, as well as first time buyers looking to ease the financial strain of interest rate rises. The Bank of England has raised interest rates no fewer than four times over the past year, taking the rate from 4.5 % to 5.5 % between August of last year and May of this year.

As a result of the interest rate rises, each of which was for 0.25 %, consumers in the UK have been expressing higher than usual interest in fixed rate mortgages. This is because they wish to avoid the financial pinch of further interest rate rises, and with another interest rate rise predicted by many analysts and economists, consumers are trying harder than ever to tie their interest rate on their mortgage for a period of time.

According to recent data many people that took out fixed rate deals several years ago are set to experience a sharp financial shock when the fixed rate comes to its end, as they will then have to switch to a variable rate that is far higher than it was when they took out their fixed rate mortgage, which could mean hundreds of pounds extra in mortgage repayments. Although these consumers can opt for another fixed rate the actual rate that they receive will be far more than the rate they secured several years ago.

Many consumers have expressed interest in fixed rate mortgages following the interest rate rises, and this includes buy to let landlords as well as property purchases and those wishing to remortgage. One official stated: "Our research also shows that an even higher proportion of landlords have been taking out fixed-rate loans. 78 per cent of landlords have been opting for fixed-rate mortgages in recent months."