First time buyers 'could turn away from fixed-rates'

24-Jul-2007

Recent research shows that the vast majority of first time buyers are opting for fixed-rate deals in an attempt to stave off the impact of recent rate rises, but one lender has suggested that the window for such anticipatory moves is closing.

GMAC has said that many fixed-rate deals are now more expensive than their variable rate counterparts, and advised that lenders should alter their forecasts accordingly.

Last week Mortgage Financial advised that young professionals looking to buy their first home typically took out a fixed-rate, 100 per cent deal because of the feasibility and stability of such offers, but other products may offer cheaper deals in the future, GMAC-RFC advises.

"Now is the time for intermediaries to harness the change and look towards tracker and discounted products to drive business growth as demand for this type of product will inevitably increase in the foreseeable future. Those that shy away from this may be missing a trick with consumers hungry for a good deal," commented Julie Gaskin, corporate relations manager at GMAC-RFC.

"Fixed rates currently on offer are higher than we have seen for several years, making tracker and discounted deals look increasingly attractive, and in many cases cheaper," added Ms Gaskin.

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