No rate cut dividend for fixed mortgages

16-Jan-2008

Last month's decision by the Bank of England to reduce interest rates by 0.25 per cent has not been passed on to applicants for fixed rate mortgages, new figures suggest.

Moneysupermarket.com, the price comparison website, revealed that, in fact, the average fixed rate mortgage has increased to 7.31 per cent from 7.3 per cent.

This will be bad news for first-time buyers, who often opt for fixed rate deals in order to give themselves some certainty over their outgoings.

"Our data shows, on average, unless you are a low-risk borrower, a new fixed-rate mortgage will cost you more," said Louise Cuming, head of mortgages at moneysupermarket.com.

"I shudder to think what would have happened to the average fixed-rate mortgage if the Bank of England hadn't cut rates."

Existing homeowners looking for a better deal and people looking to buy their first property would have been waiting for a cut in the base rate before signing up to a new fixed rate mortgage.

This means thousands are likely to be disappointed, as concerns about the ongoing credit squeeze prompt lenders to cover themselves first.

Fixed rate mortgages remain the most popular type of mortgage, accounting for 70 per cent of all new agreements.

Discounted mortgages 'to become more popular' MPC opts for hold


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