Discounted mortgages 'to become more popular'

15-Jan-2008

Discounted mortgages are set to become more popular this year, as homeowners and first-time buyers look to keep their repayments down.

Despite last month's interest rate cut, the base rate remains one per cent higher than January 2006, meaning people coming to the end of fixed-rate deals could be in for a rude awakening.

Mortgage brokers are though expecting further cuts in the cost of borrowing, with ten per cent of those canvassed by specialist lender GE Money predicting a drop to below five per cent.

"Despite the January decision to hold, our latest research reveals brokers expect the Bank of England base rate to fall throughout 2008 - many of which believing it will fall below five per cent," said Gerry Bell, head of mortgage marketing at GE Money.

"Discounted rates are likely to become more popular throughout the year."

First-time buyers will be hoping that the housing market will cool this year, improving affordability and giving them a better chance of buying their first property.

But at the same time, they will be hoping for interest rate cuts to keep the cost of mortgages as low as possible.

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