Fixed-rate mortgages remain number-one borrowing choice

08-Jul-2008

Higher borrowing costs have not put people off fixed-rate mortgages, according to new figures.

Research from Fairinvestment.co.uk indicates that medium term (between five and ten years) fixed-rate products remain the number one choice for borrowers, despite news last month that interest on two-year fixed-rate mortgages had hit a ten-year high of seven per cent.

Around a quarter of those polled by the website said they would carry on choosing a short term fixed-rate (up to five years) mortgage regardless of interest rate movements.

"Our research was surprising considering how high mortgage rates are in the current market," remarked James Caldwell, the director of the site.

He continued: "For 25 per cent of our respondents to say they would choose a short term fixed-rate, despite the fact they are unlikely to find a rate under seven per cent, suggests that people do not have much confidence in the chances of the mortgage market recovering within the next five years."

Mr Caldwell went on to note that as rates increase, so too do mortgage set-up fees – a significant reason for potential first-time buyers being pushed out of the market.

"This was reflected by the research which showed that eight per cent of those questioned cannot afford to buy a house at all," he concluded.

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