Fixed-rate mortgages 'increasingly attractive'

13-Dec-2006

First time buyers and repeat purchasers are increasingly returning to fixed-rate mortgages, evidence reveals.

According to data released by the Council of Mortgage Lenders (CML), over 60 per cent of first time buyers and repeat purchasers opted for fixed-rate mortgages, ahead of the anticipated interest rate rise in November.

In September, 59 per cent of all mortgages underwritten were fixed-rate.

"The increase in fixed-rate loans during October reflects shrewd borrowing decisions by consumers, who were well aware that interest rates were expected to go up in November," said Michael Coogan, director general for CML.

"It is encouraging that many borrowers are planning ahead financially and locking themselves into a period of certainty about their monthly mortgage payments," he added.

The spectre of further interest rate rises in 2007 returned yesterday, after it emerged that the rate of inflation had risen to 2.7 per cent in November, under calculations taken by the Consumer Price Index.

First time buyers concerned about how an increase in interest rates might effect how much they would have to pay each month should consult a good broker.

Under the Retail Price Index - the measure used in wage negotiations - the rate of inflation rose to 3.9 per cent last month.

As the market for first time buyers toughens, new companies are offering new services to help first time buyers buy new properties by working with the house-builders.

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